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PREPARED UNDER THE DIRECTION OF 

FREDERICK A. CLEVELAND, PH.D. 



Publications of 
The Institute for Government Research 



STUDIES IN ADMINISTRATION 

The System of Financial Administration of Great 
Britain 

By W. F. Willoughby, W. W. Willoughby and 
S. M. Lindsay 

The Budget 

By Rene Stourm 

(T. Plazinski, Translator; W. F, McCaleb, Editor) 

The Canadian Budgetary System 

By Harold G. Villard and W. W. Willoughby 

The Problem of a National Budget 
By W. F. Willoughby (In press) 

The Movement for Budgetary Reform in the States 

By W. F. Willoughby (In press) 

The System of Financial Administration of the United 
States (In preparation) 

Teachers' Pension Systems in the United States 

By Paul Studensky (In preparation) 



PRINCIPLES OF ADMINISTRATION 

Principles Governing the Retirement of Public Em- 
ployees 

By Lewis Meriam 

Principles of Government Purchasing 

By Arthur G. Thomas (In press) 

Principles of Public Employment 

By A. W. Procter (In preparation) 



SERVICE MONOGRAMS OF THE UNITED STATES 
GOVERNMENT 

The U. S. Geological Survey (In press) 

The Reclamation Service (In press) 

The Bureau of Mines (In preparation) 

D. APPLETON & COMPANY 

PUBLISHERS NEW YORK 



THE INSTITUTE FOR GOVERNMENT RESEARCH 
STUDIES IN ADMINISTRATION 



THE CANADIAN 
BUDGETARY SYSTEM 



BY 

HAROLD G. VILLARD 

AND 

W. W. WILLOUGHBY 



D. APPLETON AND COMPANY 
NEW YORK LONDON 



P/tUc:*3.^^i^ 






Copyright, 1918 
The Institute for Government Research 



JUL 26 iyib 



Printed in the United States of America 






©Ci,A499855 



The Institute for Government Research 

Washington, D. C. 



The Institute for Government Research is an association of 
citizens for cooperating with pubHc officials in the scientific 
study of government with a view to promoting efficiency and 
economy in its operations and advancing the science of admin- 
istration. It aims to bring into existence such information and 
materials as will aid in the formation of public opinion and 
will assist officials, particularly those of the national govern- 
ment, in their efforts to put the public administration upon a 
more efficient basis. 

To this end, it seeks by the thoroughgoing study and ex- 
amination of the best administrative practice, public and 
private, American and foreign, to formulate those principles 
which lie at the basis of all sound administration, and to de- 
termine their proper adaptation to the specific needs of our 
public administration. 

The accomplishment of specific reforms the Institute recog- 
nizes to be the task of those who are charged with the re- 
sponsibility of legislation and administration; but it seeks to 
assist, by scientific study and research, in laying a solid 
foundation of information and experience upon which such 
reforms may be successfully built. 

While some of the Institute's studies find application only 
in the form of practical cooperation with the administrative 
officers directly concerned, many are of interest to other 
administrators and of general educational value. The results 
of such studies, the Institute purposes to publish in such form 
as will insure for them the widest possible utilization. 

OFFICERS 

Frank J. Goodnow, Robert S. Brookings, 

Chairman, V ice-Chairman. 

Charles P. Neill, Frederick Strauss, 

Secretary. Treasurer. 

TRUSTEES 

Edwin A. Alderman A. Lawrence Lowell 

Robert S. Brookings Samuel Mather 

James F. Curtis Charles P. Neill 

R. Fulton Cutting Charles D. Norton 

Raymond B. Fosdick Martin A. Ryerson 

Felix Frankfurter Frederick Strauss 

Frank J. Goodnow Theodore N. Vail 

Jerome D. Greene Charles R. Van Hise 

Arthur T. Hadley Robert S. Woodward 
Caesar Lombardi 

DIRECTOR 
W. F. Willoughby 



EDITORIAL PREFACE 

In the first published report of the Institute for Gov- 
ernment Research, entitled "The System of Financial 
Administration of Great Britain/' a detailed discussion 
was given of a system of financial administration which, 
if account be taken not only of actual efficiency but of 
conformity to the requirements of popular government, 
may be deemed the most successful in existence. 

A comparison of the essential features of that system 
with the methods of financial administration pursued in 
the United States tends strongly to show that the British 
system is, in almost all important respects, a far better 
one than that which we possess. Before, however, one 
is warranted in urging that the British system, or certain 
features of it, be copied by ourselves, it is necessary to 
determine whether the characteristic features of that 
system are in conformity with the constitutional struc- 
ture of our own government and with those principles 
of public policy which we have accepted as fundamental. 
And even where no such opposition or disharmony is 
found, it is further necessary to determine in how far 
the efficient or inefficient operation of the system is due 
to its formal organization and in how far to special cir- 
cumstances and, especially, to traditions or conventions 
which, though without legal force or definite formula- 
tion, are none the less effective. If, therefore, it be pos- 
sible to trace the practical working of the system under 
diverse conditions of time, place, and political traditions, 
and to make comparison of the different results reached, 
an opportunity will be given for determining, more con- 
fidently than would otherwise be the case, the extent to 
which the good and bad results reached have been due 
to excellencies and defects which are inherent in the sys- 

VII 



INTRODUCTORY NOTE 



tern itself, and .which, therefore, may with profit be 
copied or avoided. 

Fortunately, this opportunity may be found in the 
study of the financial system of the great oversea Dom- 
inion of Canada, which embodies many of the chief 
features of the British system. To this study the present 
volume is devoted. 

In order that the comparison of actual operation in the 
two countries might be most effectively made, this Can- 
adian report has been made to follow as nearly as pos- 
sible the order and mode of treatment that was adopted 
in the report on the British system. It is to be observed, 
however, that in the present report the opinions of Can- 
adian public officials and publicists have been quoted more 
liberally than were the observations of British officials 
with reference to the workings of their own institutions. 
It is believed that the policy of reproducing these 
judgments and explanations is justified even though their 
correctness may not in some cases be admitted. In 
order also that the method of presentation followed in 
the British system might be understood, it was deemed 
advisable to summarize the general analysis of the prob- 
lem of financial administration given in the first chapter 
of the British report. It has been necessary to speak 
also of the constitutional system of Canada in so far as 
it has a bearing upon the administration of the national 
finances. 

In the course of this study a considerable amount of 
data relative to the budget systems of the several provin- 
cial governments of Canada was gathered. This 
material has been presented by Mr. Villard in the 
October, 191 7, number of Municipal Research, a period- 
ical published by the New York Bureau of Municipal 
Research. 

As two authors have collaborated in the preparation 
of this volume, it may be proper to state that chapters 
I, 2, 8, 9 and 11 have been written by Professor Wil- 
loughby; chapters 3 and 12 are the work of Mr. Villard. 

VIII 



INTRODUCTORY NOTE 

The remaining chapters have been prepared by the 
authors jointly. Mr. Villard is responsible for the many 
quotations from Canadian parliamentary debates and 
budget speeches found in the text, the selection and 
arrangement of which only an exhaustive perusal of the 
Canadian Hansard made possible. 

W. F. WiLLOUGHBY. 



IX 



CONTENTS 

Chapter Page 

I. Analysis of the Problem of Financial Administration 1 

II. The Canadian Constitutional System 8 

Relations between the Dominion and the Provinces 8 

The Judiciary 10 

Distribution of Legislative Powers in the Dominion 11 

Totality of Legislative Power Granted 14 

Cabinet Government in Canada 15 

Imperial Control 16 

Outline of Dominion Government 17 

III. Control of Government Expenditures before Confedera- 

tion: Provincial Subsidies 20 
History of French Canada, 1763-1812: Executive Absolu- 
tism over Public Receipts and Expenditures 20 

Legislature's Restricted Taxing Powers 22 

Conflict between Executive and Legislature over Control of 

Taxation and Appropriations : 1812-1830 23 

Introduction of Responsible Government : 1831-1841 27 

Lord Durham's Report 28 

Initiative in Voting Public Money Confined to Executive . . 32 
Parliament Attains Complete Control of Government Re- 
ceipts and Expenditures : 1841-1867 33 

Events Leading to Confederation 34 

Federal Assumption of Provincial Debts 36 

Subsidies to the Provinces 37 

Subsidies to the Newer Provinces 39 

Changes in Debt Assumption Provisions 40 

IV. General Administrative Practices 46 

Canada's Fiscal Year and Sessions of Parliament 46 

Consolidated Revenue Fund 49 

Basis upon which the Public Accounts are Rendered 51 

Closing of the Accounts of the Fiscal Year: Rule as to 

Lapsing of Unexpended Balances 51 

Revotes of Lapsed Estimates 55 

Capital and Revenue Accounts 57 

V. Executive Expenditures without Legislative Sanction 63 

Governor General's Warrants 63 

Abuse of Governor General's Warrants not Considerable 

since 1896 70 

Excess Expenditures 71 

Fixed and Controllable Expenditures 73 

XI 



CONTENTS 

Chapter Page 

VI. The Estimates : Preparation and Submission 75 

Preparation of the Estimates 75 

Control by the Minister of Finance 77 

Estimates for PubHc Works 79 

Cabinet Control 81 

Submission 83 

Distinction between General and Supplementary Estimates. 83 

Form of the Estimates 86 

VIL The Estimates: Action upon in Parliament 97 

Money Bills Originate in the Commons 97 

Tacking. 98 

Appropriations must be Recommended by the Executive. . . 98 

Senate Amendments 101 

Committees of Supply and of Ways and Means 102 

Debate 103 

Procedure in Committee of Supply 104 

Report Stage 108 

Supply Bills 110 

Adequacy of Consideration of the Estimates by Parliament 111 

Increase of Expenditures 112 

Votes on Account 116 

Revenue Measures 118 

Budget Speech 1 19 

Powers of Private Members 121 

Reports of the Committee 122 

Supply Bills in the Senate 123 

Addresses to the Crown 123 

Votes of Credit 124 

Private Bill Legislation 124 

Role of the Opposition in Canadian Budget Practice 126 

VIII. Organs and Officers for the Administration of the 

Finances 135 

Parliament as the Fund Raising and Granting Authority.. 135 

The Governor in Council 136 

The Treasury Board 138 

Department of Finance 141 

Chartered Banks of Canada as Custodians of the Public 

Funds 145 

The Auditor General 148 

IX. Issue and Disbursement of Public Funds 150 

Issue of Public Moneys from the Treasury 150 

Disbursement of Public Funds 155 

X. Audit of Public Accounts 159 

Audit of Disbursements. 159 

The Treasury Board as an Organ of Appeals 160 

Public Accounts Committee 164 

XL The System of Financial Reports 176 

The Estimates 176 

Public Accounts for the Fiscal Year 176 

Report of the Auditor General for the Fiscal Year 182 

Budget Speech of the Minister of Finance 196 

XII 



CONTENTS 

Chapter Page 
XII. Political Evils and Their Effect on Canadian Financial 

Administration 199 

The Spoils System and Patronage Lists 199 

Partisan Apportionment of Government Contracts 207 

Public Works Expenditures to Further Party Interests 210 

Local Improvements at Federal Expense 214 

Expenditures for Public Buildings to Further Party Interests 218 

Partisan Usages and Practices in the Provinces 229 

XIII. Divergencies of the Canadian from the British Budgetary 

System and Their Results 233 

Executive Control over Financial Legislation. 235 

Treasury Control over Estimates and Expenditures 238 

Centralization of Responsibility for Expenditures 245 

The System of Governor General's Warrants 248 

Expenditures in Excess of Appropriations 253 

Unexpended Appropriations 253 

Distinction between Capital and Revenue Accounts 255 

Supplementary Estimates 260 

Lump Sum Appropriations 261 

Public Accounts Committee 264 

General Political Conditions 267 

The Spoils System 268 

Political Partisanship 269 

No Strong "Opposition" 271 

Equilibrium of Revenues and Expenditures 272 

Growing Power of the Cabinet 276 

Provincial Subsidy System 279 

Appendix 

1. Department of Finance and Treasury Board Act 285 

2. Consolidated Revenue and Audit Act 288 

3. The Appropriation Act, No. 1, 1917 329 

4. Budget Speech Delivered by the Minister of Finance, April 

24, 1917 360 



XIII 



CHAPTER I 

ANALYSIS OF THE PROBLEM OF 
FINANCIAL ADMINISTRATION 

Practically all of the great states of the world, with 
the exception of the United States, have adopted what 
is known as the budgetary system of financial ad- 
ministration. As stated in the British report,^ "the 
idea underlying the conception of a budgetary, as 
opposed to a non-budgetary, system is that, in the 
former, the effort is made by those who are respon- 
sible for initiating financial measures to consider both 
sides of the national account at one and the same 
time, or at least in their relations to each other, and to 
place them before the legislative branch when appro- 
priations are requested; while, in the latter, no such 
attempt is made. It is of the essence of the budge- 
tary system that the fund-raising and fund-granting 
authority shall be presented with a balanced state- 
ment of estimated receipts and expenditures to the 
end that it. may see whether there is a prospective deficit 
to be provided for, or a surplus which may be applied in 
the way of reduction of the national debt or for some 
other purpose, or avoided by the remission of taxation." 

This balancing of receipts and payments and the 
coordination of estimates for future expenditures 
with the recommendation of means whereby the 
funds to meet them may be obtained by the govern- 
ment, is, however, but a single element in the ad- 
ministration of the finances of a government. It is, 
none the less, an element which has an important de- 

^ The System of Financial Administration of Great Britain, by W. F. 
Willoughby, W. W. Willoughby and S. M. Lindsay, p. 225, 



THE CANADIAN BUDGETARY SYSTEM 

termining influence upon many of the other features 
of the system of financial administration of which it 
constitutes a part. The whole system itself embraces 
the following steps or operations: 

1. On the Reveriiie Side 

1. The determination by the law-enacting authority 
of the ways and means whereby the moneys needed by 
the government may be raised. Generally speaking these 
are by taxes, loans, sales of public property, and fees or 
other charges for public services. This legislative deter- 
mination is practically always influenced, if not con- 
trolled, by estimates made by the executive branch of 
probable revenues to be received from existing or pro- 
posed new sources of income. Whether or not modifica- 
tions in existing revenue laws shall be made or new loans 
authorized will naturally depend in large part upon the 
expenditures which are authorized for the next fiscal 
period. 

2. The establishment and operation by the executive, 
acting within its constitutional or statutory powers, of 
an administrative organization for the collection of these 
revenues or the sale of government bonds, notes, or other 
credit obligations. In all systems of responsible govern- 
ment this involves the keeping of accurate records and 
books of account, the rendering and publishing of full 
reports of all transactions, and the existence of a system 
of audit and control to see that accruing revenues are 
collected and duly accounted for. 

2. On the Custody Side 

I. The organization and maintenance of a treasury 
system for the receipt, custody, and issue to disbursing 
officers of all public revenues. 

3. On the Expenditure Side 

I. The preparation of estimates of sums needed to 
be expended by the different branches of the government 
during the next fiscal period. From the nature of the 



FINANCIAL ADMINISTRATION 

case, whether the budgetary system be adopted or not, 
it is necessary that, in their first form at least, these 
estimates should be drawn up by the executive depart- 
ments through and by which the expenditures are to be 
made. In connection with these estimates it is usual to 
furnish a balance sheet showing the existing liabilities 
and available assets of the government. 

2. The consideration of these estimates, financial 
statements, and executive recommendations, if any, by 
the legislature, and, based upon them, or upon further 
information obtained by itself, the authorization of sums 
to be spent during the next fiscal period and the desig- 
nation of the persons by whom, and the purposes for 
w^hich, they shall be expended. 

3. The establishment and operation of an adminis- 
trative system through which the expenditure of the 
sums of money thus made available shall be authorized, 
disbursed, and duly accounted for. This involves the 
adoption and use of standard forms of requisitions, 
vouchers, etc., that will constitute the warrant for and 
evidence of all expenditures. There is also involved 
the keeping of books of account in which all financial 
transactions are entered, with the several items duly 
segregated according to the specific appropriations legis- 
latively made. There is further involved, at least in all 
systems of responsible governments, the making periodi- 
cally of full reports, based upon the accounts thus kept, 
of all financial transactions. 

4. The establishment of means whereby these reports, 
when rendered, may be duly audited in order that their 
accuracy may be determined as well as the legality of 
each of the expenditures made. These audits thus not 
only furnish the means whereby executive or adminis- 
trative superiors determine whether their subordinates 
have faithfully and properly executed their duties, but, 
when presented to the legislature, supply the information 
which will enable that body to determine whether or not 
its commands and instructions have been duly followed. 

3 



THE CANADIAN BUDGETARY SYSTEM 

From the foregoing outline it will appear that, 
simply as a matter of accountability, it is essential 
that no dollar of the public moneys should be spent 
except in pursuance of a legal authorization issued by 
the organ of government which gives utterance to 
the public will; that, therefore, each official should be 
individually and personally responsible for any pay- 
ments that he makes; that, consequently, accurate 
and complete financial accounts should be kept and 
periodically published for the information of the pub- 
lic and the guidance of the legislature or appro- 
priating organ; and, finally, in order that this in- 
dividual responsibility may be made sure, and the 
records correctly kept, that all accounts should be sub- 
ject to audit and control. 

So much simply from the standpoint of account- 
ability and book-keeping accuracy. When, from this, 
we turn to the question of operative efficiency and 
economy in the raising and spending of the public 
funds we find several considerations which must 
necessarily apply whatever may be the specific sys- 
tem of financial organization and administration. 

In the first place it is essential that the revenues and 
expenditures of the government should be co- 
ordinated. This means that past and estimated 
future returns from existing sources of revenue 
should be reported in such a form that their totals 
may be taken into consideration when the estimates 
for future expenditures are being considered. 

In the second place it would seem to be essential 
that the recommendations for future public expendi- 
tures should emanate from the services which are to 
spend them, for it is clear that they are in the best 

4 



FINANCIAL ADMINISTRATION 

position to know their own needs. Where, however, 
the question is whether the government shall enter 
upon some new enterprise or activity for the carrying 
out of which no existing administrative agency is com- 
petent or appropriate, the case is stronger that the legis- 
lative branch should itself originate the project and 
frame the estimates for the resulting costs. 

While it is proper that, with regard to at least the 
general and routine operations of government, each 
spending branch or bureau of the government should 
make the original estimate of its financial needs for 
the coming fiscal period, it is equally essential to the 
efficiency and economy of any public financial sys- 
tem that these original estimates should be subject to 
rigid scrutiny and revision by the superior admin- 
istrative authorities, and that all of these several 
estimates, thus revised, should be brought together 
and again revised so as to maintain a proper propor- 
tion between the several sums asked for, and to bring 
their totals into harmony with the general needs and 
resources of the government. 

The need in any system of financial administration 
for this revision and coordination of the original 
estimates of various bureaus and departments is due 
to two facts, the one of knowledge, and the other 
psychological, as characteristic of human nature itself. 
As regards the matter of knowledge, it is clear that 
the heads of the several subdivisions of the administra- 
tive service cannot be expected to have exact in- 
formation as to the needs of services other than their 
own or of the government as a whole. As regards 
the psychological or subjective element, it is but natural, 
and indeed laudable, that each head of a bureau should 

5 



THE CANADIAN BUDGETARY SYSTEM 

emphasize the value of the service which he directs and 
seek to increase its scope and importance and, therefore, 
be disposed to ask for corresponding financial support. 
It is thus to be expected that he will ask for all that he 
can possibly hope to get without regard to the demands 
of the other services. 

A third feature essential to the efficiency of any 
system of national finance is that the legislative or 
appropriating body should not specify in such detail 
the manner in which and the purposes for which the sums 
appropriated shall be spent that those who direct the 
spending services are left with so slight discretionary 
powers that they are not able to make their expendi- 
tures conform to the exact needs of their services, as 
they are revealed from day to day in the course of 
actual administration. It is essential that the fund- 
granting authority should demand a complete ac- 
counting down to small details of all sums spent, and 
that abundant opportunity should exist for criticism 
upon its part of everything that is done. But it is 
fatal to real administrative efficiency for the legisla- 
tive body to deny a reasonable degree of discretionary 
power to its administrative agents. 

A fourth prime feature of an efficient and econom- 
ical administration of the financial affairs of a state, 
is that the right or opportunity should not be given to 
the legislature or to its individual members to add 
items of expenditures to, or to suggest increases in those 
items contained in the estimates or recommendations of 
the executive spending departments. 

The experience of France and the United States is 
eloquent testimony as to this. Even in England, 
where this right of increasing the appropriation 

6 



FINANCIAL ADMINISTRATION 

asked for does not exist, there is evidence that, so far 
as the House of Commons is able to use pressure or 
influence, it is not in the direction of economy. Thus, 
for example, in the very able report of a Select Com- 
mittee on National Expenditure, made in 1903, the 
statement is made that ''eight w^itnesses w^ho have 
had special opportunities of noticing the effect of dis- 
cussions in the Committee of the House of Commons 
on Supply gave it as their opinion that for many years 
past the result was to urge increased not decreased ex- 
penditures." 

It will be found that in Canada, as in England, the 
right of the House of Commons to vote appro- 
priations greater than those asked for by the Execu- 
tive does not exist, but, unfortunately, it would ap- 
pear that the Government in making up its estimates 
does not resist the ''pork barrel" influences which, 
upon the legislative side, have been so conspicuous in 
France and the United States. One of the interesting 
points of the present inquiry will therefore be to de- 
termine, if possible, why this unsatisfactory feature 
should have found a place in the Canadian and not 
in the English system. 

The foregoing prime essentials of an efficient 
financial system have been mentioned in this intro- 
ductory chapter not with the view of discussing com- 
prehensively the problem, but only that they may be 
especially borne in mind when examining and passing 
judgment upon the detailed description of the Cana- 
dian system which is to follow."^ 

^ For a fuller consideration of this question see "The Problem of a 
National Budget," by W. F. Willoughby. Studies in Administration, 
Institute for Government Research, 1917. 



CHAPTER II 

THE CANADIAN CONSTITUTIONAL 
SYSTEM 

The document which serves as the Constitution of 
the Dominion of Canada and provides for the federal 
union of the constituent Provinces is the British 
North America Act enacted in 1867 by the British 
ParHament. 

When created, the Dominion consisted of the four 
Provinces of Ontario, Quebec, Nova Scotia and New 
Brunswick. Since that time the Provinces of Mani- 
toba, British Columbia and Prince Edward Island 
have been admitted to the Federation, and the Prov- 
inces of Saskatchewan and Alberta formed out of the 
great territories subject to the jurisdiction of the 
Dominion. There are now, therefore, nine Prov- 
inces in the Union, while still under "territoriar* juris- 
diction are the district of the Yukon and the Great 
Northwest Territory which embraces approximately 
a million and a quarter square miles. 

Relations between the Dominion and the Provinces. 

Though resembling the Constitution of the United 
States in that provision is made for a federation of 
autonomous bodies-politic under one superior gov- 
ernment, there are certain important differences dis- 
tinguishing the two instruments of government 
which need to be pointed out. 

In the first place the British North America Act 
itself outlines the governments to be enjoyed by the 
Provinces, whereas, as is well known, the only pro- 
vision of the United States Constitution with refer- 

8 



CANADIAN CONSTITUTIONAL SYSTEM 

ence to the governments of the individual states is 
that they shall be republican in form. Thus the 
Canadian instrument provides that in each province 
there shall be a Lieutenant Governor appointed by 
the Governor General of Canada and, after five years, 
removable for cause. Ontario is given a unicameral 
legislature to be elected according to provisions set 
forth in the act. Quebec is given a bicameral cham- 
ber, the members of which are to be elected according 
to the methods stated in the act. The existing legis- 
latures of Nova Scotia and New Brunswick are 
continued. 

The establishment by the British North America 
Act of the provincial legislatures and the offices of 
the Lieutenant Governors gives to the Provinces, in 
a formal sense, a status equal to that of the Dominion 
government since they derive their being and powers 
from the same source. When, however, we consider 
that the Lieutenant Governors are appointed by the 
Governor General of the Dominion, and that there is 
given to the central government the right to disallow 
provincial acts, it is seen that in these respects at 
least the Canadian Provinces occupy a position in- 
ferior to that enjoyed by the states of the American 
Union. 

This right of disallowance is one which may be 
exercised not merely upon the ground that the prov- 
incial acts are ultra vires, as tested by the British 
North America Act, but because they are deemed 
unwise or unjust, or inconsistent with imperial British 
interests. It is, however, to be observed that, for- 
saking the earlier practice, the established doctrine 
of recent years is that provincial acts shall not be dis- 

9 



THE CANADIAN BUDGETARY SYSTEM ' 

allowed except upon grounds of unconstitutionality 
or of prejudice to general dominion or imperial in- 
terests. And even as regards constitutionality, the 
practice is, except in very clear cases, to allov^ this to 
be settled by the courts. 

The Judiciary. In several other important respects 
the Canadian federation is a more centralized one than 
is the American. All the judges, except of the probate 
courts, are appointed by the Dominion government. 
They hold office during good behavior and have their 
salaries fixed by the Dominion Parliament.^ 

The Act of 1867 provided for the establishment of 
a Dominion Court of Appeals and for such other 
tribunals as might be needed for the due administra- 
tion of the laws of Canada. In pursuance of the 
authority thus granted, the Parliament in 1875 estab- 
lished two tribunals, the one known as the Supreme 
Court of Canada and the other as the Exchequer 
Court of Canada. 

Besides a comprehensive appellate jurisdiction 
over the judgments and decrees of provincial courts 
in matters both civil and criminal, the Supreme Court 
has authority to adjudicate controversies between 
the Dominion and provincial authorities and, upon 
request of their respective legislatures, between the 
Provinces themselves. To this court also the Gov- 
ernor General in Council may refer certain constitu- 
tional questions for its opinion. To it also come ap- 
peals from the Exchequer Court. In criminal cases 
the judgments of the Supreme Court are final. From 
judgments on appeal from the Exchequer Court in 

^ It is provided that the judges shall ht selected from the bar of the 
Province in which they are to sit. 

10 



CANADIAN CONSTITUTIONAL SYSTEM 

Admiralty cases, an appeal lies of right to the Judicial 
Committee of the Privy Council in England. In all 
other cases an appeal to the Judicial Committee lies 
only after leave from that body is obtained. It may 
also be added that, upon leave obtained, appeals to 
the Judicial Committee may be taken from the 
judgments of the courts of the Provinces. The 
Supreme Court consists of a Chief Justice and five 
puisne judges. 

Until 1887 the judges of the Supreme Court acted 
as judges of the Exchequer Court. In that year, 
however, because of the great growth of exchequer 
business, it was found necessary to set up a wholly 
independent court, presided over by a single judge 
with a jurisdiction relating especially to claims 
against the state or actions brought by or on behalf 
of the government for the recovery of fines and for- 
feitures. 

By later acts the jurisdiction of the court has been 
extended to cover matters of admiralty and prize, 
patent infringements, copyrights and trademarks, 
and, in certain cases, the ordering of the sale of in- 
solvent railways. In 1912 an assistant judge was 
provided. For convenience to the suitors the court 
holds sessions in different parts of the Dominion. 

Distribution of Legislative Powers in the Dominion. 
As regards the distribution of legislative powers between 
the Dominion and the Provinces, the British North 
America Act pursues a different method from that 
of the American Constitution. In the United States, 
as is well known, the Congress possesses only those 
powers which are enumerated, including those im- 

II 



THE CANADIAN BUDGETARY SYSTEM 

plied as ''necessary and convenient'' for carrying the 
specified powers into execution. To the states or to 
the peoples thereof are expressly reserved all legisla- 
tive authority not thus granted. In the Canadian in- 
strument, however, the attempt seems to have been made 
by its framers to divide the entire legislative domain 
between the Provinces and the Central Government, 
so that the two fields thus marked out would be 
mutually exclusive and collectively comprehensive 
and making neither one the residuary possessor of 
all unenumerated powers. Thus, we find a careful 
enumeration of the provincial as well as of the 
Dominion legislative powers. To the enumeration 
of provincial powers there is added the grant "gen- 
erally of all matters of a merely local or private nature 
in the Province.'*' 

The enumeration of powers exclusively granted to 
the Dominion Parliament is introduced by the state- 
ment that the Dominion Parliament shall have the 
power to "make laws for the peace, order, and good 
government of Canada in relation to all matters not 
coming within the classes of subjects by this Act as- 
signed exclusively to the legislatures of the Prov- 
inces; and for greater certainty, but not so as to 
restrict the generality of the foregoing terms of this 
section, it is hereby declared that (notwithstanding 
anything in this act) the exclusive legislative au- 
thority of the Parliament of Canada extends to all 
matters coming within the classes of subjects next 
hereinafter enumerated;" and the enumeration con- 
cludes with the statement that "any matter coming 

1 British North America Act, Section 92, par. 16. 

12 



CANADIAN CONSTITUTIONAL SYSTEM 

within any of the classes of subjects enumerated in 
this section shall not be deemed to come within the 
class of matters of a local or provincial nature comprised 
in the enumeration of the classes of subjects by this Act 
assigned exclusively to the legislatures of the Prov- 
inces."^ 

It would appear from the provisions which have 

been quoted that the intention was that the Provinces 
were to have legislative power with reference to all 
unenumerated powers of a purely local character. It 
is not so clearly stated that the Dominion Parliament 
was to have legislative authority with reference to 
all matters of a general or dominion interest. In 
fact, however, the words which have been quoted, 
that the dominion legislative power should extend to 
the making of laws for the "peace, order, and good 
government of Canada" taken in connection with the 
statement that the enumeration of specific powers is 
not to be construed as limiting the generality of the 
preceding terms of the section, have been construed 
as giving to the Dominion comprehensive authority 
to enact all laws which relate to matters of a general 
as distinguished from a purely local or provincial 
character. It is thus seen that, in fact, the Dominion 
is as much the residual claimant to all general legis- 
lative powers as are the Provinces to purely local 
legislative powers. In effect, then, as regards un- 
enumerated powers the Dominion government is in 
a far stronger position than is the National govern- 

^ British North America Act, Section 91. 

Section 93 makes special provision regarding laws in relation to 
education; Section 94 makes provision for the bringing about of uni- 
formity of laws of the Provinces relating to civil and property rights; 
and Section 95 provides that the Dominion and Provinces shall have 
concurrent jurisdiction with regard to the control of Agriculture and 
Immigration. 

13 



THE CANADIAN BUDGETARY SYSTEM 

ment of the United States. And, as regards the set- 
tlement of disputes as to whether a given matter may 
be deemed of provincial or dominion interest, the 
final word is with the Supreme Court of the Dominion 
or with the Judicial Committee of the English Privy 
Council. 

It is furthermore to be observed that the expressly 
granted dominion powers include important subjects 
that, under the American system, are not given to the 
general government. Thus they include the general 
regulation of trade and commerce, quarantine, sea- 
coast and inland fisheries, banking, incorporation of 
banks and the issue of paper money, savings banks, 
bills of exchange and promissory notes, interest, bank- 
ruptcy, marriage and divorce,^ and, comprehensively 
"the criminal law, except the constitution of courts 
of criminal jurisdiction, but including the procedure 
in criminal matters." 

The predominance of dominion over provincial 
legislation where a conflict exists has been repeatedly 
affirmed by the English Privy Council.^ 

Totality of Legislative Power Granted. Another 
feature which sharply distinguishes the Canadian 
from the American system is the principle that the 
dominion and provincial legislatures together possess 
the totality of legislative power, except so far, of 
course, as it is reserved by the British Parliament 
itself. In other words there is not in Canada, as 

^ The Provinces are granted authority to legislate with reference to 
"the solemnization of marriage in the Provinces." The harmonizing of 
this provision with the dominion grant of jurisdiction over marriage and 
divorce has given rise to not a little controversy. 

2 See for example, Attorney General of Ontario v. Attorney General 
of Canada, 1894 Appeal cases 189; La Compagnie Hydraulic v. Con- 
tinental Heat and Light Co., 1909 Appeal cases 194. 

14 



CANADIAN CONSTITUTIONAL SYSTEM 

there is in the United States, a field of individual 
rights which the legislative authority may not enter. 
As stated by an eminent Canadian constitutional 
commentator: "The scheme of our Federation Act 
was to have no reserved power, but that there should 
be, in Canada, the same kind of legislative power as 
there is in the British Parliament, so far as that was 
consistent with the confederation of the Provinces 
and our position as a Dominion within the Empire. 
. . . Here then, again, the framers of the British 
North America Act have been faithful to the state- 
ment in the preamble of the Act, that it was passed to 
carry out the expressed wish of the legislatures of the 
different Provinces of Canada, that they should be 
federally united Vith a constitution similar in prin- 
ciple to that of the United Kingdom.' "^ 

Cabinet Government in Canada. The Act of 1867 
does not make specific provision for the institution in 
Canada of responsible parliamentary government as 
it exists in the United Kingdom, but it was well un- 
derstood that this form of rule which already existed 
in the Provinces should be continued in them and in- 
stituted in the dominion government which was to 
be established. This, in fact, was the special mean- 
ing of the provision that Canada was to have a con- 
stitution similar to that of the mother country. This 
expectation has been realized; and, although it can- 
not be said that the cabinet system has developed in 
Canada exactly as it has in Great Britain, it is suf- 
ficient for the purposes of this report to say that in 
Canada we have to deal with governments of the 
EngHsh parliamentary type. And thus it is to be re- 

^ Lefroy, Canada's Federal System, p. 95. 

15 



THE CANADIAN BUDGETARY SYSTEM 

membered that when the Governor General who 
represents the Crown in Canada, and the Lieutenants 
who act in a similar representative character in the 
Provinces, are spoken of as doing or authorized to do 
a given act, it is meant that, in fact, the act represents 
the will of cabinets of ministers politically responsible 
to their respective legislatures. 

Imperial Control. With regard to the extent to 
which the Canadian governments are subject to 
British imperial control it will not be necessary to say 
more than that, whatever may be technical legal com- 
petence of the imperial government, in assured fact 
Canada has complete independence of action with 
regard to all matters which relate to Canadian in- 
terests and which do not conflict with imperial 
policies. And this actual independence has been 
constantly increasing, and in practice is now con- 
strued to extend to matters which for many years 
were regarded as primarily imperial in character and 
therefore reserved for British imperial control. Thus 
laws governing navigation, immigration, tariffs, and 
naturalization are now held to be within the com- 
petency of the Dominion and even as to treaties the 
established doctrine is that other than purely political 
connections entered into by Great Britain shall 
obtain the approval of Canada before being made ap- 
plicable to that country. And furthermore, Canada, 
acting nominally through the British foreign office 
or a British diplomatic agent, has negotiated and 
entered into special agreements with foreign powers. 

Disregarding, then, juristic refinements, the 
Dominion of Canada may, for the purpose of this re- 

i6 



CANADIAN CONSTITUTIONAL SYSTEM 

port, as well as for many other matters, be regarded 
as an independent sovereign state. 

The special financial relations which exist between 
the Dominion and its constituent Provinces will be 
considered as a special topic in the chapter that 
follows: 

Outline of Dominion Government. It is provided 
by the Constituent Act of 1867 that the executive 
authority of the Dominion shall be vested in the King 
of Great Britain and Ireland and carried on in his 
name by a Governor General aided by a Privy Council. 
The functions of the Governor General, who is ap- 
pointed by the Crown, are almost wholly formal in 
character. He has in Canada no more independent 
discretionary powers than has the King in England. 
His ministers, as in England, are members of his 
Privy Council and the acts authorized in his name, 
even when partaking of a prerogative character, are 
the result of advice given to him by his ministers. 
These, in conformity with the principles of cabinet 
government, are members of Parliament and remain 
in office only so long as they are able to retain the sup- 
port of a majority in the Lower House. The Privy 
Council at present (1917) consists of a premier and 
president, and the heads of fourteen executive depart- 
ments, together with several ministers without port- 
folios.^ 

The Parliament of Canada consists of two houses, 
the Senate and House of Commons. The members 

1 British North America Act 1867. Section 11. "There shall be a 
council to aid and advise the Government of Canada, to be styled the 
Queen's Privy Council for Canada, and the persons who are to be mem- 
bers of that Council shall be from time to time chosen and summoned by 
the Governor General and sworn in as privy councillors, and members 
thereof may be from time to time removed by the Governor General." 

17 



THE CANADIAN BUDGETARY SYSTEM 

of the Senate are appointed for life by the Governor 
General, acting of course upon the advice of the 
Ministry of the day. In practically all cases the 
ministry in power have nominated persons of their 
own political faith, with the result that the political 
complexion of the Senate has varied according to the 
political party which has remained for any length of 
time in power. There are now eighty-seven senators, 
who are apportioned among the Provinces roughly 
according to their respective populations. The 
speaker of the Senate is appointed and removable by 
the Governor General from among the members of 
that body. 

The members of the House of Commons are 
elected by popular vote for terms of five years. It 
is provided that the Province of Quebec shall always 
have sixty-five members and the other Provinces 
proportionately according to their respective popula- 
tions. At present (191 7) there are two hundred and 
thirty-five members. As in the United States, the 
qualifications for voting for members of Parliament 
are fixed by the Provinces, and they vary somewhat 
in the different Provinces. The House elects its own 
speaker. 

The Senate has exactly the same powers with respect 
to legislation as has the lower branch except that "bills 
for appropriating any part of the public revenue, or for 
imposing any tax or impost, shall originate in the House 
of Commons.''^ 

The attitude of the Senate towards financial meas- 
ures coming to it from the House of Commons will 
be specifically described in Chapter VII in which will 

^ British North America Act, 1867, Section 53. 

18 



CANADIAN CONSTITUTIONAL SYSTEM 

be considered the legislative procedure with re- 
lation to money bills. It will there be seen that since 
1870 the Senate has made no attempt to defeat a tax 
or appropriation act. With regard to other matters, 
and many of them of considerable importance, the 
Senate has opposed its will and persisted in its oppo- 
sition. Thus in 1913 the Senate defeated the very 
important measure passed by the House authorizing 
the giving of assistance by Canada to the naval forces 
of the Empire.^ 

The Governor General is given the right to appoint 
a small number of additional senators in order that 
aid may thus be given the ministry in power to over- 
come the resistance of the Senate to the will of the 
Commons. This right has not, however, been ex- 
ercised. Practice has established the rule that the 
Senate shall not amend a money bill sent to it by the 
Lower House. 

1 For a list of other instances of Senatorial opposition to the House 
see Bourinot, Parliamentary Procedure and Practice in the Dominion of 
Canada, 4th ed., 1916, p. 286. See also Riddell, The Constitution of 
Canada in Its Historical and Practical Working. 



19 



CHAPTER III 

CONTROL OF GOVERNMENT EXPEND!- 

TURES BEFORE CONFEDERATION: 

PROVINCIAL SUBSIDIES 

To understand the present system of financial ad- 
ministration in Canada and especially the matter of 
Dominion subsidies to the Provinces it will be neces- 
sary to describe briefly certain conditions existing 
prior to the enactment of the British North America 
Act of 1867. 

History of French Canada — 1763-1812: Executive 
Absolutism over Public Receipts and Expenditures. 
For more than two centuries a French colony, Can- 
ada became a part of the British Empire by the 
treaty of 1763. Besides being assured in the pos- 
session of their property and privileges and permitted 
to observe their religion, the inhabitants obtained the 
benefits of British criminal law which was less harsh 
than that of France. They were also promised a 
representative form of government in place of the 
absolutism previously exercised by the French kings. 
As under the French regime, the territorial or casual 
revenues were reserved to the Crown. These con- 
sisted of certain seigniorial dues, the income derived 
from the Jesuits' estates and proceeds of the sale of gov- 
ernment timber and land. The right of levying 
taxes and of regulating the trade and commerce of 
the colony was deemed to be vested in the British 
Parliament. 

When the outbreak of the American Revolution 
appeared imminent, British statesmen considered it 
prudent to grant additional concessions to the French 

20 



GOVERNMENT EXPENDITURES 

Canadians and thus to make sure of their loyalty to 
the British Crown. Accordingly the so-called 
Quebec Act was passed in 1774, which in reality con- 
sisted of two separate enactments. One of these 
imposed certain duties on spirits and molasses to be 
expended solely by the Crown in order to provide a 
revenue "towards defraying the expenses of the ad- 
ministration of justice and the support of the civil 
government of the Province." The other statute 
gave a form of government. Complete religious 
liberty was granted to adherents of the Roman 
Catholic Church; an appointive legislative council 
was created with full legislative powers, except in 
matters of taxation ; and the old French law based on 
the Coutume de Paris was reestablished. The fate- 
ful consequencies of this last provision were not fore- 
seen — that it w^ould revive and perpetuate French in- 
stitutions in Canada and would halt the assimilation 
of the French and EngHsh colonists. 

During the American Revolution a migration of 
expelled loyalists took place from the United States 
to Canada; and, after the peace of 1783 many others 
followed who did not wish to lose their British citi- 
zenship. A large number of these established them- 
selves in the western part of the Province beyond the 
region of French settlements. As these western set- 
tlers were disinclined to conform to French customs 
and regulations, the British Ministry decided in 1791 
to divide the colony into two portions. The point 
at which the land grants of the French Crown ceased 
was taken as the line of division. All the territory to 
the east continued to be held under French tenure 

21 



THE CANADIAN BUDGETARY SYSTEM 

and was called Lower Canada, while that to the west 
was governed by English laws and was designated 
Upper Canada. The effect of this legislation was to 
accentuate the isolation of the French Canadians 
from the English speaking element of the population 
and to keep their sense of nationality all the more 
alive. 

Legislature's Restricted Taxing Powers. The act 

of 1791 established a representative form of govern- 
ment for the two Provinces. Each was granted a 
legislature made up of an elective house of assembly 
and of a legislative council. The members of this 
last named body were appointed for life by the 
Crown, which also named the Governor General for 
Lower and a Lieutenant Governor for Upper Canada. 
The British Parliament reserved to itself, however, 
the right to regulate the trade and commerce of the 
two Canadas and to determine what navigation dues 
should be paid. In addition, the duties imposed by 
the Quebec Act of 1774 continued to remain in force 
and could not be repealed by the local legislature. 
Besides the income from this source, the territorial 
revenues were under the exclusive control of the 
executive government, and the Houses of Assembly 
had only the right to dispose of the proceeds of such 
imposts as were collected under the authority of laws 
enacted by the legislature itself. Thus, with fixed 
and permanent sources of revenues at its command, 
the executive branch of the government was almost 
entirely independent of the legislature. In case the 
royal revenues proved insufficient to defray all the 
expenses of the government, recourse was had to 

22 



GOVERNMENT EXPENDITURES 

imperial funds and the deficit was covered by the 
English military exchequer. This state of affairs 
continued without any marked change until the war 
of 1812. 

Conflict between Executive and Legislature over 
Control of Taxation and Appropriations: 1812-1830. 
With the growth of the population in the two Can- 
adas after 1800, the royal revenues began to prove 
more and more inadequate to meet the increasing 
expense of administering the affairs of the Provinces. 
On the other hand, the purely provincial revenues col- 
lected under the authorization of the local legislature 
showed a handsome surplus over the required ex- 
penditures. As before mentioned, it was the custom 
of the authorities to cover the deficit between the 
actual annual expenditure and the permanent revenue 
appropriated by Parliament towards its discharge 
out of the grant made by the imperial government 
for the support of the army. When the war of 1812 
made the customary resort to military funds im- 
possible, the government met the deficit in its finances 
by borrowing from the surplus moneys of the Prov- 
inces without first obtaining the consent of their re- 
spective legislatures. 

As the spending of the provincial funds upon 
services for which no legislative appropriations had 
been made was highly irregular, the British Governor 
General felt constrained in 1817 to ask the local Par- 
liaments officially to sanction such illegal outlays. 
Since the sources of permanent revenue did not equal 
the annual permanent charges for the provincial civil 
Hst, the executive branch was compelled to ask the 

23 



THE CANADIAN BUDGETARY SYSTEM 

legislature from this time on for an annual grant of 
funds to help defray the expenses of the government. 
This marked the beginning of a long and bitter con- 
stitutional struggle for the control of the public purse- 
strings between the appointees of the Crown and the 
elected representatives of the people. 

When this contest began, considerable dissatisfac- 
tion had already manifested itself on account of the 
action of the Government in naming only a certain 
favored group for office. The distribution of all the 
political patronage of the Provinces was in the hands 
of the Governor General and the British Ministry and 
was used in Upper Canada to further the interests of 
a political and aristocratic combination known as the 
Family Compact. This body held possession of all 
government offices to the exclusion of those favored 
by the mass of the voters. In Lower Canada, the 
numerically much superior French Canadian element 
formed the proscribed class and was denied appoint- 
ment to office. Besides causing intense party dif- 
ferences, this inequitable attitude of the governing 
circle accentuated an already present and unfortunate 
race antagonism. 

As one means of obtaining proper recognition at 
the hands of the Government, the leaders of the 
popular side in the Houses of Assembly endeavored 
to exercise sole control over both the funds levied 
under the statutes passed by the legislature itself and 
the proceeds of the duties imposed and regulated by 
the acts of the British Parliament. They therefore 
asserted the right to control the revenues of the 

24 



GOVERNMENT EXPENDITURES 

Crown and to vote the money for each item of ex- 
penditure. In this move, however, they were 
strenuously opposed by the Governors General, who 
regarded their proceedings as an unlawful invasion 
of the royal prerogative. Since the tenure of office 
of those officials was dependent on the Crow^n alone, 
they deemed it their duty zealously to uphold the 
privileges of the Crown against any encroachments 
on the part of the provincial legislatures. 

Unable to bring any pressure to bear on the course 
of the executive head of the government, the Houses 
of Assembly were under a further disadvantage in 
that the upper branch of the legislature did not work 
in harmony with them. Thus, in 1819, the House of 
Lower Canada carefully went over the whole civil 
list of the Province and passed a supply bill in which 
the salary of every person in the employment of the 
government was specifically set forth. This meas- 
ure was promptly rejected by the Legislative Council 
on the ground that it improperly assumed the right 
of Parliament to prescribe to the Crown the number 
and classification of its servants and would make 
their retention in office dependent on the whims of 
an elective body instead of during His Majesty's 
pleasure. Nor was there any way in which the 
political complexion of the Upper House could be 
changed. The designation of the members of the 
Legislative Councils lay entirely in the hands of the 
Governor General, and, when the conflict with the 
Houses of Assembly became acute, he took pains to 
see that only staunch upholders of the royalist point 
of view were appointed to the Upper Chamber. 

Under these circumstances, it was difficult for the 

25 



THE CANADIAN BUDGETARY SYSTEM 

popular branch of the legislature to make headway 
in its struggle for control of the Crown revenues. 
As the principle that the executive and legislative 
branches of the government should be in accord had 
not been embodied in the legislation affecting the two 
Canadas, the governing coterie was entirely inde- 
pendent of the Houses of Assembly and under no 
necessity of heeding their wishes. Moreover, these 
bodies in their earlier days had passd certain perma- 
nent revenue acts, which could not be amended so as 
to give the Assembly annual control unless the Legis- 
lative Council gave its assent thereto. As the pur- 
pose of such amendments was only too well known, 
the upper branches of the legislature steadily de- 
clined to give this requisite consent. With both the 
Crown and the permanent sources of revenue voted 
by the local Parliaments more or less at its com- 
mand, the executive government found it possible to 
carry on its functions even when the Houses of As- 
sembly refused to vote certain needful supplies by 
simply obtaining assistance from the Imperial 
Exchequer. For example, the Governor General ad- 
vanced in both 1822 and 1823 £30,000 from the military 
funds at his disposal towards the expenses of the gov- 
ernment of Lower Canada. The House of Assembly 
regarded his course of action as unwarranted and re- 
jected the claim put in for the reimbursement of this 
amount. 

As no coordination existed between various branches 
of the government the executive authorities and the 
legislature frequently became deadlocked over the ques- 
tion of supplies. The leaders of the popular party were 
regarded as undesirable because they had opposed grant- 

26 



GOVERNMENT EXPENDITURES 

ing the demands of the government in full and were 
regularly excluded from office. On the other hand, 
their most uncompromising opponents were appointed 
to all the high official positions. This unfair treatment 
caused great resentment and party passion ran high in 
consequence. In view of the dangerous political dis- 
sensions prevailing in the Provinces, it was patent to all 
observers that some remedy for the existing unsatisfac- 
tory state of affairs would have to be found. 

Introduction of Responsible Government: 1831- 
1841. As a first step towards allaying the growing 
unrest and the constantly increasing friction between 
the executive and legislative branches of the provincial 
governments, the British Parliament passed an act in 
1 83 1 permitting the legislatures of the two Canadas to 
devote the proceeds of the duties levied under imperial 
statutes towards the expenses of the local governments. 
This left only the relatively insignificant territorial or 
casual revenues still subject to the disposition of the 
Crown. While this surrender of the main sources of 
Crown revenues appeased the legislature of Upper 
Canada and led to the making of a permanent provision 
for the civil list and the salaries of the judiciary, the 
Assembly of Lower Canada still remained dissatisfied. 
Determined to gain control of the Crown's casual 
revenues also, and to force the governing branch to obey 
its wishes, the Lower Canadian House actually refused 
for four years to make any proper provision for the 
carrying on of the public service. So acute did party 
feeling become over the continued failure to redress the 
grievances of the people and to allow them a proper 
voice in the government that open rebellions against 
British authority occurred almost independently of each 



THE CANADIAN BUDGETARY SYSTEM 

other in the two Canadas in 1837. Although quickly 
suppressed, they had as a consequence the suspension 
of the constitution of Lower Canada and the sending 
of Lord Durham by the British Ministry to report on 
the best method of allaying the prevailing popular dis- 
content. 

Lord Durham's Report. After a long and careful 
investigation into Canadian affairs, Lord Durham sub- 
mitted in January, 1839, an elaborate report to the 
Queen in which he made various suggestions for 
remedying the political and social ills besetting the two 
Canadas. In order to render certain the ultimate pre- 
dominance of the English element of the population, he 
advised that the two Provinces be reunited and also 
urged that ''harmony in place of dissension between the 
various powers of the State" should be secured by intro- 
ducing the British system of responsible government. 
This last desideratum was to be accomplished by con- 
fining within much narrower limits the interference of 
the imperial authorities in the details of colonial affairs, 
and by issuing instructions to the colonial governors to 
intrust the administration of public affairs to such men 
only as could command the support of a majority of the 
members of the Houses of Assembly. 

In the course of his report. Lord Durham also recom- 
mended that the right to introduce bills calling for the 
expenditure of public money be taken away from the 
individual members of the Assembly. The reasons for 
this most important proposed change can best be given 
by quoting his own language : 

It is necessary that I should also recommend what 
appears to me an essential limitation on the present 
powers of the representative bodies in these colonies. I 

28 



GOVERNMENT EXPENDITURES 

consider good government not to be attainable while the 
present unrestricted powers of voting public money and 
of managing the local expenditure of the community are 
lodged in the hands of an Assembly. As long as revenue 
is raised, which leaves a large surplus after the payment 
of the necessary expenses of the civil government, and 
as long as any member of the Assembly may, without 
restriction, propose a vote of public money, so long will 
the Assembly retain in its hands the powers which it 
everywhere abuses, of misapplying that money. . . . 
If the rule of the Imperial ParHament, that no money 
vote should be proposed without the previous consent 
of the Crown were introduced into these colonies, it 
might be wisely employed in protecting the public inter- 
ests, now frequently sacrificed in that scramble for local 
appropriations, which chiefly serves to give an undue 
influence to particular individuals or parties. "" 

The same slipshod methods regarding the appropria- 
tion of public moneys prevailed, in fact, in all the British 
North American colonies. Speaking of former condi- 
tions in the Province of New Brunswick, a writer of 
considerable prominence observes as follows : 

The business of the legislature was conducted with a 
loose hand. There was no restriction by the Govern- 
ment upon the expenditures; but every member had 
access to the public chest, in his own way, for the benefit 
of his constituents, without regard to system, calculation 
or economy. The Budget was formed not as now by 
the Provincial Secretary, with the whole Government 
answerable for it; but in a haphazard way, every mem- 
ber, no matter how outre his ideas of trade, having an 
equal voice in its preparation. There was no Board of 
Works at this time. The public moneys were expended 
on roads, bridges, etc., in accordance with the wants or 
wishes of the inhabitants of particular districts, afford- 

^ Lord Durham's Report, British Parliamentary Edition, p. 117. 

29 



THE CANADIAN BUDGETARY SYSTEM 

ing large jobs sometimes to favorites and active sup- 
porters of candidates for the Assembly. The most influ- 
ential members, whether in the House or with their 
constituents, generally managed to get the lion's share 
in the supply distribution. It was not then, as now, 
contrary to law for a member to hold a plurality of 
offices under the government. ... In some instances 
half a dozen offices were held by one member; such 
members furnished a strong body-guard to support their 
employers, and to aid in perpetuating a system so favor- 
able to the money-spenders and oppressive to the tax- 
payers ; hence the storms and differences that arose on 
every effort being made in the Assembly to reform the 
system under which these and cognate abuses existed. 
The surrender of "The Initiation of the Money Grants" 
(as recommicnded by Sir Wm. Colebrook) was stoutly 
resisted by the House, as an encroachment upon the 
liberties of the people. Honorable members knew too 
well the value of ''holding the purse strings" in their 
own hands, and how their interests were best subserved, 
to surrender without a struggle privileges which gave 
them such an immense advantage."^ 

Again, in regard to the want of system in preparing 
the government estimates, he says:^ 

There seemed to be a great deal of groping in the 
dark. The Initiation of the Money Votes resting with 
the House, there was no estimate made by anyone for 
the respective public services for which moneys were 
required. There was no individual responsibility in the 
matter. Members were like vessels at sea without rudder 
or compass — subject to the fluctuations of the winds — 
sums were proposed by any member and carried, for all 
sorts of purposes, without due consideration as to 
whether the treasury contained money enough upon call 

1 G. Fenety, Political Notes and Observations, Fredericton, 1867, 
p. 30. 

2 Ibid. p. 203. 

30 



THE CANADIAN BUDGETARY SYSTEM 

to satisfy the demands. There could have been no better 
system in the world for running the Province into bank- 
ruptcy. If commerce is beset by a calm and stagnates, 
and the revenues are prosperous, it is an inducement to 
over-burden the supply book with new amounts, based 
upon frivolous pretexts. When money is plentiful, favor- 
ites are not forgotten. Thus from year to year we were 
brought closer to the verge of the precipice, so that when- 
ever a commercial panic ensued, which was periodically 
so common to the trade of this Province, we were with- 
out money and without credit. 

How this lack of responsibility on anyone's part in the 
preparation of the annual budget disastrously affected 
the financial equilibrium of the Province is well illus- 
trated in the following extracts from a speech delivered 
in 1842 by Hon. Charles Simonds, the head for the time 
being of the New Brunswick Government: 

Five years ago he found the Province in a highly 
flourishing condition — the treasury full and business of 
all kinds in successful operation. The Province now is 
entire prostrate — deeply in debt and no means at com- 
mand to extricate it out of its difficulties. The revenue 
during the last five years affords an aggregate of 
£467,000; and the debt was now £133,000. The wants 
of Government to carry on its operations, independent 
of sums for roads and bridges, were £68,000 (per 
annum). It would then be seen what immense sums 
of money had been squandered, after the necessary 
expenses of Government had been paid. It was not the 
fault of one individual, or of any number of individuals, 
but the fault of the abominable system that favored so 
much prodigality. This was the system throughout: 
help me and I'll help you. There was no check whatever 
in the expenditure of the public moneys. The very same 
system was observed in England previous to 1706, and 
precisely the same consequences flowed from it. The 

31 



GOVERNMENT EXPENDITURES 

people bestirred themselves in the matter and succeeded 
in overturning it.^ 

When the English Ministry decided to adopt Lord 
Durham's recommendations and sent out the future 
Lord Sydenham to carry them into effect, the new Gov- 
ernor General found a similar condition of financial 
chaos existing in the two Canadas. ''The finances/* he 
wrote, "are more deranged than we believed even in 
England. The deficit, £75,000 a year, more than equals 
the income." Concerning the conduct of parliamentary 
business, he unbosomed himself as follows : 

You can form no idea of the manner in which a Colo- 
nial Parliament transacts its business. I got them into 
comparative order and decency by having measures 
brought forward by the Government. But when they 
came to their own affairs, and, above all, to the money 
matters, there was a scene of confusion and riot of 
which no one in England can have any idea. Every man 
proposes a vote for his own job, and bills are introduced 
without notice and carried through all their stages in a 
quarter of an hour. One of the greatest advantages of 
the union will be that it will be possible to introduce a 
new system of legislating, and, above all, a restriction 
upon the initiation of money votes. . . . The change 
will be decidedly popular, for the members all complain 
that, under the present system, they cannot refuse to 
move a job for any constituent who desires it.^ 

Initiative in Voting Public Money Confined to 
Executive. In accordance with Lord Durham^s 
recommendation, the British Parliament on July 3d, 
1840, passed an act reuniting Upper and Lower Canada 
''to form one Province for the purpose of executive gov- 
ernment and legislation." This statute provided for a 

1 Quoted in Fenety, Notes and Observations, p. 38. 

2 Scrope, Memoir of Lord Sydenham, London, 1844, p. 165. 

32 



THE CANADIAN BUDGETARY SYSTEM 

Provincial Parliament, consisting of a legislative coun- 
cil — whose members were appointed by the Crown for 
life — and an elected Assembly in which the Provinces 
were allowed an equal number of representatives. A 
consolidated revenue fund was established and all ap- 
propriation bills were required to originate in the Legis- 
lative Assembly, which was forbidden to pass any vote, 
resolution or bill involving the expenditure of public 
money unless the same had been first recommended to 
it by a written message of the Governor General. 

Because the new measure prescribed that only the 
English language should be used in Parliament, and 
allotted Lower Canada with its half as large again a 
population only the same membership in the Legislative 
Assembly as Upper Canada, the French Canadians were 
violently opposed to its adoption. Their resistance 
proved futile, however, and on February lO, 1841, the 
union of the two Provinces was officially proclaimed. 
The change to a responsible ministry form of govern- 
ment and the taking away from individual members of 
the popular branch of the legislature of the right to 
initiate the expenditure of public funds having thus been 
carried out in due course in the new Province of United 
Canada, the other British North American colonies 
were not long in following suit. By 1852, all had 
adopted the new system which Lord Durham had so 
warmly advocated as essential for the attainment of 
good government in England's colonial dependencies. 

Parliament Attains Complete Control of Govern- 
ment Receipts and Expenditures: 1841-1867. Ac- 
cording to the terms of the Union Act of 1840, which 
established the new Province of United Canada, the 

33 



GOVERNMENT EXPENDITURES 

British Crown surrendered control of the hereditary or 
casual revenues. Just as in the case of the amounts de- 
rived from the duties on foreign spirits imposed by the 
Imperial Parliament, the proceeds of the territorial 
revenues of Canada were paid henceforth into the treas- 
ury of the Province to be disposed of as its legislature 
might direct. The British Parliament still expressly 
reserved to itself, however, the right to levy dues and 
otherwise to regulate the trade and commerce of the 
colony. The last Canadian tariff imposed by England 
took effect on September 8, 1842, and it was not until 
four years later that all the British colonies in North 
America were authorized to reduce or alter the duties 
on foreign goods. In 1849, the imperial government 
repealed the restrictive navigation laws and, for the first 
time, allowed the St. Lawrence River to be visited bv 
vessels of all nations. From this time on, the Legisla- 
tive Assembly of Canada exercised entire control over 
government receipts and expenditures, and the English 
principle — that the elected House should impose all the 
taxes and vote the supplies — came at last into full effect. 

Events Leading to Confederation. As mentioned 
above. Upper and Lower Canada were united into one 
Province by the imperial statesman in the expectation 
that the British element in the population would gain 
the ascendency over the French Canadians. At the time 
this union took place. Upper Canada had incurred the 
large debt of $6,000,000, mainly for internal improve- 
ments. On the other hand, Lower Canada was free 
from indebtedness and had a surplus of $300,000. 
When it came to the question of revenue, a similar in- 
equality soon manifested itself. For every $70 paid by 

34 



THE CANADIAN BUDGETARY SYSTEM 

Upper Canada into the common treasury, Lower Canada 
contributed but $30. 

Since the two subdivisions were equally represented 
in the new Legislative Assembly, the members from 
Lower Canada — who represented the French Canadian 
elements — speedily secured the reins of power. By 
their unity of action, they were not long in obtaining a 
complete dominancy over public affairs and were able to 
secure the repeal in 1848 of the clause prohibiting the 
use of the French language in parliamentary debates. 
This ascendency they naturally used to further the in- 
terests of their own section as much as possible and 
spent the government funds lavishly among their own 
constituencies. 

Although Upper Canada contributed more than two- 
thirds of the total receipts, only about one-quarter of 
the government's revenues were expended for its benefit. 
Aside from resenting this unfair discrimination, the 
people of this part of the Province were gravely dis- 
quieted by the growing public debt and the waste and 
extravagance of a government, which they seemed 
powerless to overthrow. When the plan, therefore, of 
a confederation of all the British North American 
colonies was earnestly broached in 1862, it met with an 
especially warm reception in Upper Canada. Irre- 
spective of its other advantages, it was welcomed as a 
means of escape from the, to this region, unprofitable 
and unpopular union with the rest of Canada. 

Previous to the formation of the Dominion, both the 
United Canadas and the so-called Maritime Provinces — 
namely. Nova Scotia, New Brunswick and Prince Ed- 
ward Island — had derived the major part of their 
provincial revenues from customs duties. Indeed, fully 

35 



GOVERNMENT EXPENDITURES 

four-fifths of the receipts of the Province of Canada be- 
tween 1 841 -1 867 were obtained from this source. As 
the new confederation was to have the sole right of levy- 
ing custom and excise duties thereafter, its sponsors 
speedily realized that the project for a Dominion gov- 
ernment could not be carried into effect unless the pros- 
pective loss of their customs revenues could be made 
good to the Provinces in some fashion or other. Since 
the Canadian people have exhibited a not surprising 
aversion to direct taxation, a resort on the part of the 
Provinces to this method of raising funds for govern- 
ment purposes was not to be thought of. Hence, if the 
plan of confederation was not to suffer shipwreck, some 
way had to be devised for overcoming this difficulty. 

Federal Assumption of Provincial Debts. The 

scheme ultimately worked out and adopted was as fol- 
lows: On its formation, the new Dominion government 
was to take possession of and maintain certain property 
and public works belonging to the various Provinces 
whenever they formally entered the Union. Title to all 
provincial railways, canals, light-houses, post offices, cus- 
tom houses, armories, etc., was to pass at once to the 
Dominion. But, inasmuch as the Provinces had in- 
curred more or less heavy debts in acquiring the property 
and in completing the public works to be thus trans- 
ferred, it was felt that the central government should, in 
all fairness, assume the provincial indebtedness so in- 
curred. Accordingly, it was agreed that the Dominion 
government should shoulder the debts of the various 
Provinces with this proviso, however, that no Province 
was to be allowed to throw on the Dominion an indebted- 
ness in excess of $25 per head of its population as 

36 



GOVERNMENT EXPENDITURES 

ascertained by the last official census. Should the finally 
established debt of any Province exceed $25 a head, it 
was to pay interest at the rate of five per cent per annum 
on this excess amount to the Dominion treasury. But, 
in case the debt proved to be less than $25 a head, the 
Province was to receive interest — also at the rate of five 
per cent — from the Dominion treasury on the difference 
between its actual debt and the fictitious indebtedness 
which it was entitled to charge up against the Dominion. 
By subsequent legislation passed in 1873 ^^^ 1884, the 
per capita allowance to the Provinces for debt reckon- 
ing purposes was raised from $25 to $32.43. 

Subsidies to the Provinces. As stated before, the 
Provinces were unwilling to accept confederation if it 
meant that they would have to impose direct taxes. 
When they agreed, therefore, to surrender to the pro- 
posed central government the exclusive right to levy cus- 
tom and excise duties they made it a condition precedent 
that a certain portion of the revenue to be thus collected 
should be returned to them and in amount sufficiently 
large to enable them to carry on their provincial affairs 
without having recourse to direct taxation. Hence, the 
British North America Act not only relieved the 
Provinces of their obligations in the manner just de- 
scribed, but also bound the Dominion government to 
''make an annual grant in aid of each Province, pay- 
able half-yearly in advance." This grant or subsidy was 
made to consist of two parts. There was to be, first, a 
fixed sum for each Province for the support of their 
legislatures; and second, there was to be a per capita 
grant. The two together were to constitute the provin- 
cial subsidy, which, in amount, it was estimated, would 

37 



THE CANADIAN BUDGETARY SYSTEM 

be needed for the maintenance of the provincial govern- 
ment. 

The four original Provinces, New Brunswick, Nova 
Scotia, Quebec and Ontario, were allowed $50,000, 
$60,000, $70,000 and $80,000, respectively by the Domin- 
ion towards the expenses of their legislatures. The per 
capita subsidy was made "equal to eighty cents per head 
of the population, as ascertained by the census of 1861, 
and, in the case of Nova Scotia and New Brunswick, by 
each subsequent decennial census until the population of 
each of these two Provinces amounts to 400,000 souls, 
at which rate such grant shall thereafter remain." Ap- 
parently it was thought that the sum of eighty cents per 
head would yield a sufficient amount to cover the wants 
of the Provinces and it was doubtless for that reason 
that this figure was agreed upon. 

It was conceded by the advocates of confederation that 
the wiser plan would have been not to consent to the 
plan of federal subsidies for the various Provinces, but 
to compel the local governments to provide for all local 
outlays and to meet their expenditures by adopting a 
system of direct taxation. They correctly foresaw that 
'*when you have a spending power that is not under 
an obligation to find the means it spends, you have a 
spending power that is more likely to tend to extrava- 
gance than to economy."^ Nevertheless, in order to 
bring about the much desired union, they very reluc- 
tantly had to concede the bestowal annually upon the 
Provinces of Dominion government subsidies to an 
aggi*egate amount of $2,630,000. But they tried to 
prevent any further spread of the subsidy evil by pro- 
viding that the subsidies originally granted could not be 

1 Hon. Mr. Foster — Can. Hansard, 1906-07, p. 5317. 

38 



GOVERNMENT EXPENDITURES 

increased beyond the amounts specified in the Act of 
Confederation itself. It was anticipated that, as their 
population grew, the Provinces would be compelled to 
introduce a system of direct taxation in order to eke out 
the meagerness of their revenue. Contrary to what the 
founders of the Dominion desired or expected, however, 
the Provinces are still fighting shy of direct taxation and 
the Act of Confederation, as will be explained hereafter, 
was amended in 1907 so as to provide for the grant of 
greatly increased provincial subsidies. 

Subsidies to the Newer Provinces. Since the con- 
federation of the four original Provinces in 1867, 
Manitoba, British Columbia, Prince Edward Island, 
Saskatchewan, and Alberta have become component 
parts of the Dominion in the order named. When, in 
1870, Manitoba applied for admission, the question 
arose whether the new territories were to derive from 
the provincial subsidy and the assumption of debt pro- 
visions of the Dominion constitution benefits similar to 
those enjoyed by the original Provinces. The view 
finally prevailed that all future applicants for admission 
should be treated on the same basis as the Provinces first 
entering the confederation. Inasmuch as these original 
Provinces had been relieved under the terms of the 
British North America Act of all their indebtedness 
incurred for local improvements, they in effect had 
secured all the advantages of these improvements with- 
out cost to themselves. It was seen, therefore, that it 
would be unfair if the newer Provinces were not 
similarly assisted by the Dominion and enabled to ac- 
quire public buildings and local improvements free of 
cost. When Manitoba entered the Union, therefore, 

39 



THE CANADIAN BUDGETARY SYSTEM 

she was allowed a grant for the expense of her legisla- 
ture as well as the eighty cents per head subsidy and 
was also credited by the Dominion government with a 
certain assumed indebtedness, based on its estimated 
population, on which interest was allowed at the rate 
of five per cent yearly. The same treatment was ac- 
corded to the other Provinces, which thereafter became 
members of the confederation. 

Changes in Debt Assumption Provisions. When 

the scheme of provincial debt allowances was originally 
formulated, the intention was that the sums placed to the 
credit of the different Provinces under the head of debt 
account should remain intact and that only the interest 
due on these amounts should be paid over to the 
Provinces. With only this interest money at their dis- 
posal, however, the Provinces speedily found that they 
could carry out but little in the way of public improve- 
ments. Accordingly, they caused the Dominion Par- 
liament to pass an act in 1874,^ which permits the Gov- 
ernor General, with the advice of his councilors to ad- 
vance at his discretion to any Province such sums as 
may be necessary for local improvements, provided, 
however, that the sums so advanced do not in the 
aggregate amount to more than the difference between 
the assumed indebtedness credited to the Province when 
it entered the Union, and its actual debt for which the 
Dominion has made itself responsible. Within the 
limits thus specified, the statute sanctions, therefore, the 
withdrawal of the moneys to the credit of the Provinces 
with the Dominion for the purpose of assisting in the 
construction of provincial public works. In 1885, 

^ Since confederation, the Federal provincial subsidies have been 
revised more than twenty times. 

40 



GOVERNMENT EXPENDITURES 

another section was added requiring the provincial legis- 
latures to join in the application to the Governor Gen- 
eral for the withdrawal of such moneys instead of 
leaving the making of the request entirely in the hands 
of the provincial governments as theretofore. 

While the Provinces as a result of this legislation 
acquired a species of reserve fund, which could be 
drawn upon in times of emergency to meet the cost of 
new public improvements, none of the funds thus placed 
at their disposal could be used in defraying the everyday 
expenditures of the provincial governments. As the 
expenses of these governments were constantly mount- 
ing on account of the growth of population and, as it 
became increasingly difficult for them to make both ends 
meet without resorting to direct taxation, a movement 
began in 1887 to secure an increase in the direct sub- 
sidies granted to the various Provinces by the Dominion. 
At the same time, the marked rise in the revenues of 
the central government served to stimulate this agitation. 

Whereas, at confederation, one-fifth of the Domin- 
ion's total receipts had been distributed as subsidies 
among the provincial governments, this proportion had 
dwindled to less than one-ninth by 1884. Enjoying as it 
did superabundant revenues, a general feeling prevailed 
that the central government ought to contribute more 
towards lightening the financial burdens of the Prov- 
inces. Since all the local governments profited under 
the provincial subsidy arrangement and all alike were 
interested in having its benefits extended, no effective 
opposition was to be expected to the proposition to have 
the provincial subsidies increased. The difficulties of 
amending the British North America Act, however, pre- 
vented any change from being effected until 1907. In 

41 



THE CANADIAN BUDGETARY SYSTEM 

that year, the direct grants to the Provinces for the sup- 
port of their legislatures were considerably increased 
and the amount of the same made to vary in accordance 
with the size of the population. At the same time, the 
per capita subsidy to each Province was fixed at eighty 
cents a head until the total population should reach two 
and one-half millions and at sixty cents a head upon 
each soul in excess of this number. 

These changes in the original subsidy provisions of 
the British North America Act have been explained and 
defended as follows : 

I have never been able to see why in the case of the 
smaller Provinces it should be determined that we, 
recognizing the principle of payment by population, 
should say : "We will give you a share of the Dominion 
revenues, but the moment your population reaches 
400,000 the subsidy beyond that must stop, and you will 
get no increase." Now, every soul added to the popu- 
lation of a province after the 400,000 limit, adds to the 
burden of local Government. You need more roads, you 
need more schools. Every one of the items which enter 
into the outlay of provincial governments is increasing 
with the increased population of the Province. Why, 
under such conditions there should be such a limit stipu- 
lated, I have never been able to understand. I think the 
proposal, which is involved in this resolution, of a sub- 
sidy per head of the population, to continue and increase 
as the population increases is a sound one. . . . It is 
a reasonable proposition that one Province with a popu- 
lation of a couple of millions will not need at every point 
as much per capita as another Province with a small 
population. Just as the proportionate cost of any busi- 
ness is reduced as the business expands, so the great 
Province of Ontario could get along with a less sum per 
head for certain purposes than British Columbia or 
Nova Scotia or any of the smaller Provinces. I am sure 

42 



THE CANADIAN BUDGETARY SYSTEM 

that that idea must have been present to the minds of 
the fathers of Confederation.^ 

On the other hand, it was said in opposition that — 

the Government ought to have made a full examination 
not only into the expenditures of the Provinces for a 
series of years, but also into their sources of revenue; and 
before immense sums were voted out of the Dominion 
treasury, the Government should have carefully pointed 
out to the different Provinces both those expenditures 
which might have been deemed extravagant, and the 
need of utilizing all the resources in the great franchises 
of the Provinces as available means for replenishing 
their treasuries.^ 

Whether the readjustment of the Dominion subsidies 
effected in 1907 will permanently satisfy the Provinces 
is an open question. In the last few years, the revenues 
of the Dominion government have been growing by 
leaps and bounds and large surpluses of receipts over 
ordinary government expenditures have been the rule. 
This state of affairs has aroused the cupidity of the 
Provinces, and the idea has been frequently mooted of 
late that the provincial subsidies should again be 
periodically revised upwards. It is true that the re- 
adjustment of 1907 was termed unalterable, but no in- 
superable difficulties exist which would prevent the up- 
setting of this so-called final settlement. 

Any legislation of the Parliament of Canada, whether 
we use the word "final" or not, of course, we can from 
time to time amend. But by these resolutions it is pro- 
posed that an Imperial Act shall be passed providing 
that, for the purposes mentioned in section 118 of the 
British North America Act, which deals with the sub- 
sidies to the provincial governments and legislatures, the 

^ Hon. W. S. Fielding — Can. Hansard, 1906-07, pp. 5324 and 5327. 
2 Hon. Mr. Foster — Can. Hansard, 1906-07, p. 5316. 

43 



GOVERNMENT EXPENDITURES 

sums therein proposed shall be final. ... If, therefore, 
in the face of an imperial enactment, this Dominion 
Parliament should see fit, for one reason or another, to 
make some special grant to any particular Province, 
nothing that we or the Imperial Parliament can do will 
prevent it. But as there have been differences in the 
past owing to provincial jealousies over the provincial 
subsidies, we have thought it well to make some effort 
to have the present arrangement made final. . . . We 
have undertaken to do this by asking the imperial author- 
ities to declare that the sums granted the several Prov- 
inces for certain purposes shall, for those purposes, be 
final and unalterable.^ 

Although Canada's assembled representatives adopted 
such a declaration of finality, the Imperial Parliament 
omitted to insert the word "final'' in its enabling act. 
It is hardly likely that the English government would 
refuse to sanction a change which might be demanded 
hereafter both by the Dominion Parliament and the in- 
dividual Provinces. Since the Provinces regard the 
Dominion subsidies paid them, not as voluntary dona- 
tions from the central government, but as an established 
right which they acquired when they agreed to con- 
federation, it is safe to say that an attempt will be made 
sooner or later again to amend the subsidy regulating 
clause of the British North America Act in favor of the 
Provinces. On a later page, the resultant evils and the 
necessarily demoralizing effect of the Dominion system 
of provincial subsidies will be pointed out. 

Under the title "Provincial Accounts," the payments 
made each year by the Dominion government to each 
of the Provinces are set forth in an annual volume 
"Public Accounts" prepared and submitted to the 

^ Hon. W. S. Fielding— Can. Hansard, 1906-07, 5330. 

44 



THE CANADIAN BUDGETARY SYSTEM 

Minister of Finance by the Deputy Minister of Finance. 
In the accounts thus stated, it will be found that there 
are certain minor fiscal relations between the Dominion 
and the Provinces other than those relating to the in- 
terest on debt allowances and per capita subsidies. The 
purposes of this report do not make it necessary, how- 
ever, to consider these special or less important items. 



45 



CHAPTER IV 

GENERAL ADMINISTRATIVE PRACTICES 

Canada's Fiscal Year and Sessions of Parliament. 

When the Province of United Canada was formed in 
1 84 1, the colony's fiscal year coincided with the calendar 
year. In 1864, however, the fiscal year was changed 
and made to begin on July i. The reason for this de- 
viation from the original practice has been stated as fol- 
lows, by one who had been himself mainly responsible 
for bringing this about : 

The change in the fiscal year from December 31st to 
the 30th of June was not done without very grave con- 
sideration. It was then felt that the governing circum- 
stance in the estimates for this country was the harvest. 
The 30th of June was the period of the realization of 
one harvest and in advance of the reaping of the ensuing 
one. The returns, therefore, were made up to the time 
when the product of one harvest was completely ex- 
hausted, and when the estimates for the future year were 
necessarily based upon the results of the preceding har- 
vest. They found that when the public accounts were 
made up to the 31st of December before Parliament met, 
and this was not usually in March or April imder the 
old system but towards the end of February or early 
in March, it was impossible to get them ready to lay 
before Parliament and to assist in its deliberations dur- 
ing the session. It was thought by going back to the 
30th of June there would be no difficulty in having the 
public accounts and the departmental reports ready to 
be laid before Parliament when it assembled."^ 

After the formation of the Dominion, a law was 
passed in 1868 directing that the period June 30 to June 

^ Mr. Holton — Can Hansard, 1877, p. 1766. 

46 



THE CANADIAN BUDGETARY SYSTEM 

30 should constitute the Canadian financial year. Less 
than a decade later, however, an agitation arose to have 
the financial year begin at an earlier period in the year. 
The moving cause for this proposed change was the in- 
creasing frequency with which Parliament met during 
the winter months. Unlike the Congress of the United 
States, the Parliament of the Dominion does not begin 
its annual sessions on any fixed date prescribed by law. 
The time of convening is thus selected by the Admini- 
stration. 

In the early days after confederation, the Canadian 
Parliament was usually summoned at the beginning of 
spring. As the amount of business to be dispatched in- 
creased with the growth of the country, it became more 
and more the custom to call Parliament in session 
earlier in the year. This made it more difficult to pre- 
pare the necessary financial statements for the informa- 
tion of the House of Commons. As explained by one 
of the Ministry of the day : 

Very great inconvenience had been experienced as 
matters now stood, owing to the circumstance that the 
financial year terminated in the center of two working 
seasons. It was a matter of very considerable difficulty 
at a distance of eighteen months to produce accurate 
estimates, particularly for such departments as those of 
public works, marine and fisheries and the interior ; and 
these difficulties had been very seriously aggravated by 
the great increase in their territory which had taken 
place during the last three or four years. Moreover, 
since their practice of meeting very early in the year in 
February and perhaps earlier occasionally considerable 
difficulties had arisen in the proper preparation of the 
public accounts; despite all the zeal and diligence the 
officers of the department could use, they found it barely 
possible to get the accounts in readiness to lay on the 

47 



GENERAL ADMINISTRATIVE PRACTICES 

table when the House met; and it was scarcely possible 
with all their diligence for ministers to have a sufficient 
length of time to become acquainted with them. Some 
confusion had occasionally arisen in consequence, and 
he was afraid that this confusion would tend to increase 
in the future. In former years, this was by no manner 
of means the case because, as the House was aware, the 
average time for the meeting of Parliament was usually 
in March or April. With a view to remedying these 
defects, he proposed to change the fiscal year so as to 
assimilate the period for the closing of their accounts 
with the period at which the accounts in Great Britain 
were closed, and this was about the 31st of March.^ 

In accordance with this recommendation, Canada's 
fiscal year was finally changed in 1906 so as to begin on 
April I. The statute now reads that '*the public ac- 
counts shall include the . period from the first day of 
April in one year to the thirty-first day of March in the 
next year, which period shall constitute the fiscal year."^ 

Since this change took effect the Canadian Parlia- 
ment has met as a rule earlier than formerly and has 
even begun its sessions in November. One consider- 
able advantage derived from this earlier convocation 
of Parliament is the possibility, if the estimates are voted 
promptly, of starting out-of-door work on public im- 
provements as soon as weather conditions permit. In 
a country with a long winter season like Canada, failure 
to begin new construction before mid-summer often 
leads to costly delays. 

Mr. Mclntyre — They did not commence work on the 
breakwater until late in the fall, which is not the proper 
time to do work in such an exposed position. The work 
should begin in the summer when the weather is calm. 

1 Sir Richard J. Cartwright — Can. Hansard, 1877, p. 1765. 

2 Section 50 of Consolidated Revenue and Audit Act. 

48 



GENERAL ADMINISTRATIVE PRACTICES 

Sir Hector Langevin (Minister of Public Works) — I 
cannot begin to work unless the money is voted, and, as 
the session finishes generally about May or June, we 
cannot begin at the very beginning of summer/ 

One reason why we have changed the fiscal year is 
that the money may be available before the summer is 
nearly over. These works cannot be proceeded with in 
the winter, and when the House rises in July or August 
it is impossible for public works to be gotten under way 
before the winter sets in. If this year we get the supply 
bill sanctioned within the month of April, there is a fair 
chance of letting the contract and having the work done 
during the season.' 

Consolidated Revenue Fund. Following the Eng- 
lish example, provision is made for a Consolidated 
Revenue Fund constituted of ''all public moneys and 
revenue over which the Parliament of Canada now has 
the power of appropriation." In this connection it is to 
be observed that the principle thus adopted of covering 
into one fund all the revenues of the government is more 
consistently followed than it is in Great Britain; for 
there, as is shown in the volume on the System of 
Financial Administration of Great Britain, the receipts 
from certain of the services are not paid into the Con- 
solidated Fund but are retained and used by the depart- 
ments collecting them under authority given by Parlia- 
ment in what are known as ''Appropriations in Aid." 

This English practice finds no place in the Canadian 
system and commendably so. By Section 35 of the 
Audit Act it is declared that "all public moneys, from 
whatever source of revenue derived, shall be paid to 
the credit of the account of the Minister of Finance and 

1 Can Hansard, 1886, p. 1262. 

2 Mr. Fisher — Can. Hansard, 1906, p. 6054. 

49 



THE CANADIAN BUDGETARY SYSTEM 

Receiver General through such officers, banks or per- 
sons, and in such manner as the said Minister, from 
time to time, directs and appoints." 

The same section goes on to provide that all moneys 
"received by any officer, clerk or employee of the Senate 
or House of Commons of Canada as fees or sums in any 
way payable in connection with any proceedings before 
Parliament" shall be paid into the Consolidated 
Revenue Fund, and the same provision is made regard- 
ing refunds. By Section 37 it is declared that — 

The Minister of Customs, the Minister of Inland 
Revenue, the Postmaster General, and all other Minis- 
ters, and Deputy Ministers, officers, clerks or persons 
charged with the receipt of public moneys, shall cause 
the gross revenues of their several departments or offices 
to be paid at such times and under such regulations as 
the Minister of Finance, from time to time, prescribes, 
to an account to be called the account of the Minister 
of Finance and Receiver General, at such bank or banks 
as are determined by the Minister of Finance. 

And by Section 38 it is declared that — 

Every officer of the Customs or of the Inland Revenue 
and every officer otherwise employed in the collection of 
the revenue, receiving money for the Crown, shall de- 
posit the same to the credit of the account of the Minister 
of Finance and Receiver General. 

The comprehensiveness of these provisions is still 
further emphasized by the section of the act devoted to 
definitions, in which it is declared that — 

In this Act, unless the context otherwise requires — 
"public moneys," "public revenue" or "revenue," means 
and includes and applies to all revenue of the Dominion 
of Canada, and all branches thereof, and all moneys, 
whether arising from duties of customs, excise or other 
duties, or from the post office, or from tolls for the use 

50 



GENERAL ADMINISTRATIVE PRACTICES 

of any canal, railway or other public work, or from fines, 
penalties or forfeitures or from any rents or dues, or 
from any other source whatsoever, whether such moneys 
belong to Canada or are collected by officers of Canada 
for or on account of or in trust for any Province forming 
part of Canada, or for the Government of the United 
Kingdom or otherwise. 

Basis upon which the Public Accounts are Ren- 
dered. As is pointed out in the report on the British 
financial system, there are two methods of keeping the 
public accounts ; the one upon an accrual basis, the other 
upon a cash basis. The first is founded upon the prin- 
ciple of keeping separate and intact all the revenues and 
expenditures of a given year whether or not, in fact, they 
are actually paid in or out during the twelve months of 
that year. This is the system adopted by France. Ac- 
cording to the second system, the accounts of each year 
show the amounts actually received or paid out by the 
Treasury during the year without regard to whether 
or not, from a logical or commercial standpoint, they 
pertain to that year. Canada has followed the example 
of Great Britain and the United States in adopting the 
second or cash system.^ 

Closing of the Accounts of the Fiscal Year: Rule 
as to Lapsing of Unexpended Balances. When the 
first Dominion Parliament was called upon to pass legis- 
lation in regard to the public accounts, British precedents 
were closely followed. The law that was finally enacted 
provided that the public accounts should include the 
period from July i to June 30 [since changed to read 

^The relative advantages of the two systems are discussed in the 
report on the Financial Administration of Great Britain, p. 25 et seq., 
and, still more fully by Stourm in his work, The Budget, a translation 
of which has been published by the Institute for Government Re- 
search. See also H. C. Adams, The Science of Finances, p. 201 et seq. 

51 



THE CANADIAN BUDGETARY SYSTEM 

from April i in one year to March 31 in the next], and 
that ''all estimates submitted to Parliament shall be for 
the services coming in the course of payment during the 
financial year ; and all balances of appropriations which 
remain unexpended at the end of the financial year shall 
lapse and be written off." ^ 

The clause relating to the treatment of unexpended 
balances has been elucidated as follows : 

Under that clause, all amounts unexpended at the end 
of the term for w^hich money may be voted are written 
off. If $100,000 have been voted and if at the end of 
the term but $75,000 have been spent, the remaining 
$25,000 are not carried on to any future service, but 
must be written off, and a new vote taken for everything 
wanted for that service thereafter.^ 

Not long after the passage of the Public Account Law, 
however, it became apparent that the attempted copying 
of the British plan of having the public accounts close 
immediately on the expiration of the fiscal year would 
prove unworkable in Canada, the reasons for which may 
be shown by quoting the words of a member of the 
Parliament : 

The close of the fiscal year and the close of the ac- 
counts of the fiscal year are two very different things. 
In Great Britain, the fiscal year closes on the 31st of 
March, and the accounts close immediately; all balances 
lapse, and the new year begins with the appropriations 
for the year. That is quite possible in a country like 
Great Britain, with a comparatively small area, a dense 
population, and means of communication by railway, 
telegraph and telephone, which are, of course, beyond 
the means of communication in a country of such vast 

1 31st Victoria, Ch. 45, Sec. 38. 

2 Hon. Christopher Dunkin, Financial Statement to Quebec House 
of Assembly, 1868. 

52 



GENERAL ADMINISTRATIVE PRACTICES 

extent as the Dominion of Canada. It was, therefore, 
necessary to allow a certain period after the close of the 
fiscal year for the closing of the accounts. As a matter 
of fact, after the close of the fiscal year 1904-05 no less 
than $17,000,000 came into the accounts between that 
time and the period allowed by the regulations for the 
closing of the accounts. The payments made between 
the closing of the fiscal year and the closing of the ac- 
counts last year were more than the total expenditures 
of the Dominion for several years immediately following 
the beginning of the union. ^ 

Besides failing to adhere to the British rule as to the 
time for the closing of the public accounts, the Canadian 
authorities in 1876 brought about a change in the pro- 
vision of the law concerning the lapsing of unexpended 
balances of appropriations. The innovation was intro- 
duced (which is still in effect) of allowing the govern- 
ment by means of an order in council to extend for a 
period of three months the time within which appropria- 
tions made for the expiring fiscal year might be ex- 
pended. 

The present law upon this point is found in Section 50 
of the Consolidated Revenue and Audit Act, w^hich reads 
as follows : 

The public accounts shall include the period from the 
first day of April in one year to the thirty-first day of 
March in the next year, which period shall constitute 
the fiscal year; all estimates submitted to Parliament 
shall be for the services coming in course of payment 
during the fiscal year ; and all balances of appropriation 
which remain unexpended at the end of the fiscal year 
shall lapse and be written off: Provided, That upon cause 
being shown to the satisfaction of the Governor in Coun- 
cil, he may, by order in council to be made before the 

1 Hon. W. S. Fielding — Can. Hansard, 1906, p. 3820. 

53 



THE CANADIAN BUDGETARY SYSTEM 

first day of May each year, extend the tmie for finally 
closing the account of any appropriation, for a period 
of not more than three months from the end of the fiscal 
year, after the expiration of which extended time, and 
not before, the balance of such appropriation shall lapse 
and be written off. 

The concession thus granted, it is to be emphasized, is 
not one which permits any new obligation or liability to 
be incurred after the expiration of the fiscal year. It 
simply m.akes it possible, for three months after the ex- 
piration of that year, to use funds granted for that year 
to be used in payment of liabilities that have been in- 
curred but not yet paid during that year. This con- 
struction was definitely settled as long ago as 1888, by 
an order in council/ 

1 Order in Council, June 27, 1888. — The Treasury Board had under 
consideration a communication from the Auditor General respecting the 
interpretation of Section 37 of the Audit Act, which provides for the 
extension of time for closing the Appropriation Accounts. 

The Auditor General states that he understands the Section to mean: 
"That an appropriation account can be kept open for any time fixed by 
the Council, up to three months, for the purpose of charging against a 
vote all services or supplies for which the vote was taken, that is, those 
rendered before June 30." 

As the present practice of bringing down the balances of appropria- 
tions for three months, and thereby lengthening the financial year to 
fifteen months, has been productive of delay in the preparation of accounts 
for Parliament, and with the view of definitely deciding what course 
should be followed, the matter was referred to the Department of Justice 
for opinion. 

The Deputy Minister of Justice reports : "The question is, whether, 
upon an Order in Council having been passed as specified in the Section, 
a department may make additional expenditures and incur increased 
liabilities upon the strength of the original estimate; or whether the 
extension referred to in the Section is only for the purpose of enabling 
a department to pay after June 30, liabilities that have been incurred 
previously to that date. It would appear that the latter interpretation is 
the correct one. The Section, without the proviso, categorically provides 
that any balance unexpended on June 30, shall lapse, and be written off. 
The proviso does not either expressly or by implication, give a depart- 
ment power to make a new expenditure, and if that power is not con- 
tained in the proviso, it is nowhere; it does not exist. The only meaning 
to be drawn from the proviso is that the extension is made for the pur- 
pose of paying, after June 30, out of the original appropriations, such 
accounts as had at that date been incurred." 

The Board, after careful consideration of the matter, recommended to 

54 



GENERAL ADMINISTRATIVE PRACTICES 

It is to be observed that any amount spent out of the 
sums voted by Parliament during such extended term is 
treated as an expenditure chargeable to the new fiscal 
year despite the fact that the appropriation was made on 
account of the fiscal year already passed. 

Our rule is that everything spent after the ist of July 
is charged to the present year. The law does not allow 
us to charge to the past year, but only to prolong the 
period during which the money can be spent, and it must 
be charged within the year in which it is spent. ^ 

Revotes of Lapsed Estimates. As a necessary 
sequence to the system of lapsing appropriations in 
vogue in Canada, revotes of sums already once granted 
by Parliament are often unavoidable. In the case of 
public improvements, especially, the amounts placed at 
the disposal of the government very frequently cannot 
be expended within the twelve months time limit even if 
the utmost diligence be observed. Hence, if the work 
already started is to be carried to completion. Parliament 
must revote the unused balance of the original appro- 
priation. 

In the British budget practice, the theory is to have 
a revote of an estimate cover simply the unexpended 
balance of the amount previously appropriated. The 
items are not inserted in the estimates unless it is in- 
tended to spend the money asked for during the coming 
fiscal year. 

The Government cannot find in all the history of the 

Council that for the current fiscal year the present practice be retained, 
so that no inconvenience may be experienced by the departments, the 
Auditor General having intimated that he is willing that for the present 
year such course be adopted; but as the law is clearly in accordance with 
the contention of the Auditor General, the Board are of opinion that 
under existing circumstances the practice now followed cannot be con- 
tinued. John J. McGee, C. P. C. 

^ Hon. Sir Richard J. Cartwright — Can. Hansard, 1878, p. 2467. 

55 



THE CANADIAN BUDGETARY SYSTEM 

British Parliament any precedent for sums of money 
being placed in the estimates and voted, prima facie to 
be expended, when the Chancellor of the Exchequer 
knew that it was absolutely impossible to spend them/ 

In the Dominion, however, the practice is being more 
and more followed of inserting items of expenditure in 
the estimates, particularly in regard to public works 
which the authorities themselves fully realize cannot pos- 
sibly be carried out or proceeded with within the period 
of a year. Nevertheless, even though an improvement 
has not been started and no likelihood exists of getting 
it under way in the near future. Parliament is asked to 
revote the amount first asked for. Consequently, many 
of the revotes of the Canadian House of Commons dis- 
pose not of an unexpended balance, but make a re- 
appropriation of the entire amount originally voted. 
This is illustrated by the history of the appropriation 
for the proposed new drill hall in the city of Ottawa. 

This is one of the old hardy annuals. I do not know 
when we started in with this new drill hall, but I see that 
it appears in the Estimates for 1912-13, 13-14, 14-15, 
15-16, and 16-17. This is the fifth time that we have 
been asked to vote this item for the same amount of 
$50,000.' 

As will be explained at further length hereafter, the 
practice of swelling the Canadian estimates of public 
expenditures by items which cannot be spent in the im- 
mediate future has produced various evils. Without 
attempting to enumerate them all at this time, the fol- 
lowing excerpts from the Dominion House of Commons 
debates, both deaHng with revotes, can be here ad- 
vantageously quoted: 

1 Mr. MacDonald — Can. Hansard, 1916, p. 2940. 

2 Mr. Sinclair — Can. Hansard, 1916, p. 2940. 

56 



GENERAL ADMINISTRATIVE PRACTICES 

It is a very bad prinriple for Parliament to vote money 
when it is not expended. The idea is to have money 
available in the event of an election, so that the govern- 
ment can become active in spending it. We should not 
encumber our estimates from year to year with these 
revotes.^ 

I think that the system of voting money every year 
without using it, is entirely wrong. Unless it is clearly 
shown to the Minister that it is absolutely necessary a 
public building be erected in the near future, the vote 
should not be taken. You keep that vote standing from 
year to year and do nothing with it. If by the accidents 
of life, that constituency should become vacant, you can 
use this vote to carry the election and it thus has a 
corrupting influence.^ 

Capital and Revenue Accounts. One of the 
peculiarities of the Canadian budget practice is the at- 
tempted distinction between capital and revenue ex- 
penditures. In the public accounts of the Dominion, the 
estimates for the department of public works first recite 
certain proposed expenditures chargeable to capital and 
a further list of intended appropriations chargeable to 
income. But amounts spent on public works are not the 
only expenditures of the Dominion government charged 
to capital account. Under the same category have been 
placed at various times expenditures on Dominion 
lands, the Canadian militia, and the former Northwest 
Territories, advances to the Canadian Pacific and other 
railways, and the debts allowed to the Canadian 
Provinces. Of the total expenditures of the Dominion 
from the beginning of confederation, to the close of the 
fiscal year 1915, $2,166,551,376.71 were charged to the 

1 Mr. Sproule — Can. Hansard, 1906-07, p. 6054. 

2 Mr. Sproule — Can. Hansard, 1902, p. 721. 

See Appendix 3 (c) for revotes in government estimates. 

57 



THE CANADIAN BUDGETARY SYSTEM 

Consolidated Fund or ordinary revenue account, and 
$563,286,916.92 to capital account. 

As the following quoted passages will show, no hard 
and fast rule has been adhered to in determining what 
items shall be credited to capital account : 

There is one phase of this pubhc expenditure, which 
has always been to me a considerable mystery. That is 
the rule of the department as to what shall be charged 
to capital and what to revenue account. It seems diffi- 
cult to understand how the construction of a lighthouse 
may be charged to revenue account but the construction 
of a permanent pier is to be charged to capital account.^ 

Mr. Ames— Does it not seem strange to charge car- 
pets and matting that wear out in the course of a few 
years to capital account? 

Mr. Pugsley — It has been the practice, I believe, ever 
since confederation to charge the original furnishings of 
buildings at the capital to capital accounts.^ 

At Ottawa, the Parliament buildings and the various 
departmental buildings are not paid for out of current 
yearly revenue, but are charged to capital account.^ 

In Ontario, amounts spent on public buildings are not 
charged to capital account, while here [Quebec] amounts 
expended for repairs are ascribed to capital.'* 

The Capital Account as kept by the Government is a 
useless and misleading system. Road machines to the 
amount of $7978, have been placed in that account 
charge for rights of way, never opened for public use 
and temporary repairs of all kinds abound there. Even 
the cost of tearing down an old bridge is charged in this 
account.^ 

1 Mr. Ames — Can. Hansard, 1906-07, p. 5871. 

^ Can. Hansard, 1909, p. 1258. 

' Budget Speech, Ontario, House of Assembly, 1898. 

* Mr. Nantel — Quebec, House of Assembly, December 12, 1890. 

s Journal, Prince Edward Island, House of Assembly, 1908, p. 143. 

58 



GENERAL ADMINISTRATIVE PRACTICES 

While there has been a lack of consistency in main- 
taining this distinction between capital and revenue ac- 
counts the practice has been defended. It has been 
claimed, for example, that the government's credit is en- 
hanced and the sale of its securities aided by the estab- 
lishment of a capital account. 

This [new Parliament building] is a real asset as it 
represents a building of great value. It is only right that 
the money expended on objects of this nature should 
appear as a set-off against our consolidated debt. In this 
way, our financial position would be better appreciated 
at home and abroad, and would give increased confidence 
to investors in our securities.^ 

More could be said for this plea if the assets set up 
against the debts of the various governments were 
always of a lasting nature or, where perishable, had their 
value replaced by means of a sinking fund. But this is 
not the case. Much of the indebtedness of the Canadian 
Provinces has been contracted for the purpose of build- 
ing improved roads and bridges which do not constitute 
imperishable public improvements. 

Every honorable gentleman knew that the steel bridge 
was not any more enduring than a wooden bridge, if it 
was not carefully looked after from year to year. There 
was an old story of $600,000 borrowed for road pur- 
poses, which could not be considered an enduring monu- 
ment so far as capital expenditure for permanent work 
was concerned.^ 

It was a sound principle that if the country were 
getting something of a lasting character, it might be 
necessary to borrow money for the purpose of getting 
public works. But, if the money went into public works 
that were not permanent the Province would eventually 

^ Hon. Joseph Sheyn, Budget Speech (Quebec) December g, 1890. 
3 Mr. Tanner — Nova Scotia Assembly Debates, 1915, p. 201. 

59 



THE CANADIAN BUDGETARY SYSTEM 

have nothing to show for the permanent debt. Money 
spent upon a railway secures in return something of a 
permanent character, but would money expended on 
roads and bridges secure in return a permanent asset? 
No/ 

In Canada the aim has been not so much to bring 
about an equilibrium between the total revenues and out- 
lays of the government as to have the revenues and ex- 
penditures chargeable to revenue account balance. 

In place of revenue and capital accounts, the expres- 
sion ordinary and extraordinary expenditure is 
frequently employed. 

There never was a government in this Province or 
any other Province of Canada or in the Dominion, which 
took into consideration capital expenditure for the year 
in endeavoring to place before the country a statement 
of their financial operations for the year showing the 
surplus which they had. It was always the ordinary 
revenues and expenditures which were given, ^ 

Since no clearly fixed line has existed in Canada be- 
tween capital and revenue appropriations, items of ex- 
penditure can be shifted at the whim of the Government 
from one account to another.^ Hence the government 
of the day is under a constant temptation to manipulate 
the public accounts, in order to make a favorable finan- 
cial showing. Thus in 1888, the Dominion Minister of 
Finance was able to report a small surplus in place of an 
anticipated deficit by crediting the receipts from the sale 

1 Mr. Wilcox— Nova Scotia Assembly Debates, 1895, p. 148. 

2 Hon. Dr. Landry — New Brunswick Assembly Debates, 1915, p. 54. 

3 "Collingwood Harbor, Rainy River and Nanaimo Harbor, just the 
kind of expenditure we have been doing for years out of consolidated 
revenue fund, I find have been charged to capital. There seems to be 
no reason why they should be differentiated from other expenditures 
of like kind. It entirely vitiates all possible comparisons that can be 
made." Mr. Foster — Can. Hansard, 1896, 2d session, p. 2549. 

60 



GENERAL ADMINISTRATIVE PRACTICES 

of government lands in the Northwest to income instead 
of to capital account as had been the custom in preceding 
years. 

Often the distinction is made use of merely to hide 
rapidly growing expenditures. 

There seems to be a tendency to lessen the amount 
chargeable to Consolidated Fund by charging these 
amounts to capital when they ought to be charged to 
Consolidated Fund. I hold that the Government is not 
warranted in doing this. It creates confusion in our 
financial statements, and the comparisons between the 
expenditures of the different years cannot properly be 
made. The present Government have charged $600,000 
for Dominion lands to capital which were formerly 
charged to income, and here are other instances where 
these gentlemen may conceal one or two million dollars 
of expenditure in a year or two, by charging to capital 
what ought to be charged to Consolidated Revenue. I 
protest against this mode of manipulating and doctoring 
the accounts.^ 

The distinctions that have been made in the past few 
years between ordinary and special or extraordinary 
expenditures have been delusive and intended to cover 
up the actual deficiency of the revenue to meet its legiti- 
mate obligations and have also been made the excuse 
and ground for contracting loans. ^ 

Regarding the desirability of distinguishing between 
expenditures for capital outlays and for current ex- 
penses there can be no question. The attempt on the 
part of Canada to make this distinction must therefore 
be held to be one of the merits of its system of financial 
administration. It is evident, however, from the fore- 
going, that the advantages that should accrue from this 

1 Mr. Charlton— Can. Hansard, 1884, p. 1604. 

2 Hon. John S. Hull, Budget Speech (Quebec), December 5, 1893 

61 



THE CANADIAN BUDGETARY SYSTEM 

policy have been almost wholly lost through the failure 
on the part of the government to apply the principle 
adopted properly in practice. This has been due to two 
things : First, a failure to define what expenditures shall 
be deemed to be capital outlays and rigidly to adhere 
to such definition ; and, second, a deliberate misuse of the 
distinction for the partisan purpose of concealing the 
real trend of government expenditures. The whole ex- 
perience of Canada in respect to this feature of its sys- 
tem of financial administration furnishes another 
illustration of the necessity that there shall exist what is 
aptly termed a treasury conscience, as well as features 
nominally conforming to proper principles and prac- 
tices. 



62 



CHAPTER V 

EXECUTIVE EXPENDITURES WITHOUT 
LEGISLATIVE SANCTION 

It is a fundamental principle in all systems of re- 
sponsible government that no sums of the public moneys 
shall be expended without specific authority duly 
granted by the legislature. This rule is nominally ac- 
cepted in Canada. 

The very ABC of our parliamentary constitution is 
this: that no money shall be expended by the Govern- 
ment of this country without the previous sanction of 
Parliament. I need not waste words, I hope, in this 
House in elaborating so simple and well known a propo- 
sition as that.^ 

Governor General's Warrants. It will be found, 
however, that the rule is frequently honored in the 
breach. It cannot be said, however, that the practice is 
illegal, since provision is made for it in the various 
dominion and provincial audit acts. In the case of the 
Dominion, the statute reads as follows : 

If, when Parliamicnt is not in session, any accident 
happens to any public work or building which requires 
an immediate outlay for the repair thereof, or any other 
occasion arises when any expenditure not foreseen or 
provided for by Parliament is urgently and immediately 
required for the public good, then upon the report of the 
Minister of Finance and Receiver-General that there is 
no parliamentary provision, and of the Minister having 
charge of the service in question, that the necessity is 
urgent, the Governor-in-Council may order a special 
warrant to be prepared, to be signed by the Governor- 

^ Sir Richard Cartwright — Can. Hansard, 1891, p. 4537. 

63 



THE CANADIAN BUDGETARY SYSTEM 

General for the issue of the amount estimated to be 
required/ 

The clause just cited marks a radical departure from 
England's budget procedure. 

The clause of this statute has been frequently called a 
most peculiar provision. It was not intended to give 
great scope to the Executive. It is not to be found in 
the English system. There is not in England a case 
where the Executive can spend money that has not been 
appropriated by Parliament.^ 

We alone, I believe, of all the English-speaking com- 
munities that have self-government, have given to the 
Executive this power of obtaining money by means of 
Governor's warrants. So far as my research has gone, 
there is no such authority in England, and, so far as I 
know, there is no such authority in any of the other 
colonies. Our case is one in which we have thought fit 
to delegate to the Executive, under exigencies mentioned 
in the Act of Parliament, the power to get money which 
the people had not thought fit to vote.^ 

Governor General's warrants were known in the 
British North American colonies long before con- 
federation and their employment was authorized by one 
of the earliest statutes passed by the first Dominion 
Parliament. Originally these warrants were intended 
to be resorted to only under the two conditions 
enumerated below: 

For instance, suppose there is no parliamentary appro- 
priation made by Parliament for any repair or extra 
work upon this parliamentary Chamber in which we are 
concerned ; and suppose that in the interim of the session 
a fire takes place, and this Chamber is partially or totally 
destroyed and it is necessary that it shall be repaired 

1 Chapter 29, Sec. 49 — Victoria R. S. C 

2 Sir Charles Hibbert Tupper — Can. Hansard, 1896, 2d Session, p. 
692. 

3 Mr. McCarthy — Can. Hansard, 1896, 2nd Session, p. 735. 

64 



EXPENDITURES WITHOUT SANCTION 

or rebuilt for the approaching session of Parliament; 
then, in that case, the condition precedent is complied 
with, and a Governor-Generars warrant may issue, 
under the Act which I have quoted, for a sufficient sum 
of money to repair or replace this Chamber. If there is 
a public wharf at which a large and important amount 
of business is transmitted, and by a storm or other acci- 
dent it is destroyed, and the conditions of trade and com- 
merce make it, in the public interest, urgent that it shall 
be at once repaired or replaced, and, if there be no parlia- 
mentary appropriation and the accident has not been 
foreseen, then, in that case, a Governor-General's w^ar- 
rant may issue, and the work may be replaced or 
repaired. There is also a second condition precedent, 
and it is this: when any other occasion arises for an 
expenditure which is not foreseen or provided for by 
Parliament, and for which there is an urgent and imme- 
diate necessity.^ 

Instead of being sparingly resorted to only in the cases 
just described as primarily contemplated, the practice in 
the Dominion for many years was to issue Governor 
General's warrants for large amounts and on all sorts 
of occasions. 

In the year 1879-80 the government at Ottawa ex- 
pended under the authority of order-in-council without 
the authority of Parliament, or took authority by order- 
in-council without a vote by Parliament to expend the 
sum of $685,253. For the expenditure of that amount 
they had no parliamentary authority but simply the 
power of "might." In the year 1 880-1 881 Governor- 
Generars warrants were drawn for the sum of $845,000. 
For this there was no vote by Parliament. In 1882- 
1883 Governor-General's warrants were drawn for sums 
amounting to $589,000. For the year 1883- 1884 
Governor-General's warrants were drawn for the sum 

1 Mr. Foster — Can. Hansard, 2nd Session, 1896, p. 623. 

65 



THE CANADIAN BUDGETARY SYSTEM 

of $1,175,000. In 1 884- 1 885 Governor-General's war- 
rants were drawn for $734,000. In 1885-1886 Gov- 
ernor-General's warrants were drawn for the sum of 
$3,884,221. This is sufficient to show that there is 
authority for such expenditure outside of the mere 
annual vote of Parliament.^ 

I find that from 30th May, 1890, down to 28th April, 
1 89 1, Government took authority by Governor-General's 
warrants to demand no less than eighty-seven separate 
sums, aggregating $1,680,317. ... It appears to me 
that a very large number of these warrants have been 
issued under circumstances which in no way warranted 
their use. I have not time to go through with them all 
in detail, but I will instance one which was issued on 
28th April, 1 89 1. That was a grant of $75,000 to the 
Canadian Pacific Railway Company for post office 
expenditures under a certain Order-in-Council passed 
on loth February. I submit that in no shape or way 
did that particular item come within a fair construction 
of the clause in the Audit Act, which alone gives power 
to issue Governor-General's warrants. That was not 
caused by any sudden accident to a public building, nor 
was it one of those classes of expenditures which require 
urgent and immediate action as contemplated by that 
Act. The Canadian Pacific Railway Company was 
abundantly well able to wait for their money until Par- 
liament had voted it, and there was in that case as in 
many others, no reason, no justification whatever for 
paying this sum of money over without the consent of 
Parliament.^ 

The warrant to the Canadian Pacific Railway Com- 
pany just referred to was issued on the very day pre- 
ceding the meeting of Parliament. A similar case 

1 Mr. Fielding — Nova Scotia, House of Assembly Debates, 1889-90, 
p. 241. 

" Sir Richard Cartwright — Can. Hansard, 1891, p. 4538. 

66 



EXPENDITURES WITHOUT SANCTION 

occurred in 1888. To the criticism which has been 
quoted, the following tu quoque was made: 

The honorable gentleman finds fault with the present 
Government for having asked a Governor-General's 
warrant to meet current expenses immediately maturing, 
in the face of Parliament meeting, and without an 
appropriation bill having been passed for these expendi- 
tures. Now, let us see what the honorable gentleman 
did in 1888. In that year Parliament met on the 23rd 
of February. On the 22nd of February, the day before 
Parliament met, the honorable gentleman obtained a 
Governor-Generars warrant for the sum of $477,000 to 
pay the working expenses of the Intercolonial Railway. 
There was no appropriation previously made for that 
sum.^ 

So long as the order in council is passed before Par- 
liament meets, the warrant may be legally issued even 
though it be not actually signed by the Governor Gen- 
eral until after Parliament is in session. An instance 
of this kind occurred in 1887, when a warrant properly 
authorized by the Governor in Council before the con- 
vening of parHament did not actually receive His 
Excellency's signature until the day after Parliament 
had met. 

Through the employment of Governor General's 
warrants, the estimates could be and were manipulated 
to suit the exigencies of party politics. 

I have collected quite a number of cases in which 
Governor-General's warrants were obtained by the late 
Government, and in which the obtaining of these war- 
rants was an abuse. We know perfectly well that in 
1887 they were very anxious to avoid the appearance 
of any increase in the Estimates. They were about to 
go before the people and were anxious to show that the 

^ Mr. McMullen — Can. Hansard, 2nd Session, 1896, p. 799. 

67 



THE CANADIAN BUDGETARY SYSTEM 

dawn of the new era of reduction had made its appear- 
ance, and that the people might look with some little 
hope to seeing their expenditures decreased in the future. 
What did we find these honorable gentlemen then doing? 
Why, Mr. Speaker, they kept in the background no less 
than sixteen items for v/hich the House should have been 
asked for appropriations, and then, after the elections 
were over they secured Governor-General's warrants to 
pay these items. They got by means of a Governor- 
General's warrant $125,000 to pay the costs of the 
Windsor and Annapolis Railway. They got by the same 
means $46,000 to pay for walks and drives and bridges 
at the Banff Hot Springs. They got $32,000 to pay for 
rebellion losses. Surely these things were well known, 
and could have been provided for in the Estimates sub- 
mitted to the House.^ 

Frequently Governor General's warrants were used 
as a means of increasing the size of or replenishing ex- 
hausted appropriations. Thus in 1892, $394,000 was 
spent by the Dominion authorities on the construction 
of two bridges across the Lachine Canal for which Par- 
liament had only appropriated $170,000. 

The vote of Parliament for $170,000 was evaded by 
the device of a Governor-General's warrant, and while 
authority of Parliament had been obtained to spend on 
that special work $170,000, the Government illegally and 
unconstitutionally used the Governor-General's warrant, 
by which means they expended $394,000.^ 

The practice just referred to has been severely and 
very properly condemned. 

To pretend that a Government has the right to issue 
special warrants to supplement an exhausted appropria- 
tion is in direct violation of the principle by which 

'- Mr. McMullen — Can. Hansard, 2nd Session, 1896, p. 800. 
2 Mr. Davies — Can. Hansard, 1895, p. 2837. 

68 



EXPENDITURES WITHOUT SANCTION 

supplies are granted and admits of no justification in 
law or in the Constitution/ 

Through this extension in the use of Governor 
General's warrants to cases where expenditures for 
ordinary purposes were alone involved, the administra- 
tion in Canada was in effect enabled to appropriate 
money freely whenever Parliament was not sitting for 
such objects as it saw fit. Perhaps the most remarkable 
instance of this occurred in 1896. In that year the Con- 
servative party in ofiice was torn by dissensions. As a 
consequence of this, the expiring Parliament adjourned 
on April 23rd without having voted any appropriations 
for the fiscal year beginning July i. An election 
occurred thereafter which resulted in a change of gov- 
ernment, and the new Parliament was summoned to 
meet on July 16. On July 13, Parliament was pro- 
rogued to meet on August 13 and, on the following day, 
Sir Wilfrid Laurier, the new Premier, inquired of the 
Minister of Justice whether "a, special warrant can be 
issued to provide for the payment of" certain govern- 
ment employees. In response to this inquiry, the Law 
Officer of the Crown gave it as his opinion that the pay- 
ment of these employees was "urgently and immediately 
required for the public good" within the meaning of the 
statute, and that the Governor in Council might properly 
order a special warrant to be prepared to be signed by 
the Governor General for the amount deemed requisite. 
Pursuant to this advice, warrants authorizing the ex- 
penditure of $2,006,022 were issued and, although Par- 
liament had failed to appropriate any funds therefor, the 
salaries of the employees involved were paid for two 

1 Mr. Atwater — Quebec, House of Assembly, February lO, 1899. 

69 



THE CANADIAN BUDGETARY SYSTEM 

months. This action of the Government called forth 
the following comment: 

What is the first precedent which we are establishing, 
if we do not call in question the conduct of the govern- 
ment ? The precedent is this, that the Executive can take 
power to themselves to expend public money even though 
Parliament has deliberately refused to grant this money. 
. . . The Executive can sit in judgment upon the deci- 
sions of the House of Commons in reference to the 
expenditure of public money, can determine that this 
House has improperly withheld supplies and can then 
vote to themselves the supplies in the Council Chamber, 
and with a strong hand, by means of Governor-General's 
warrants, can take money which this House has refused.^ 

In another chapter, the practice of resorting to 
Governor General's warrants will be referred to again. 
The gravest objection to them is contained in the fol- 
lowing words of the late Sir Richard Cartwright : 

If you are going to allow the Government to spend 
millions of the public money without the slightest refer- 
ence to Parliament in the fashion I have now indicated, 
1 say there is an end to all proper parliamentary control 
over Government expenditure.^ 

Abuse of Governor General's Warrants not Con- 
siderable since 1896. The power granted to the 
Governor General to issue special warrants is one that 
can be and has been abused. It may, therefore, be said 
to constitute a defect in the Canadian system of financial 
administration. It is, however, to be pointed out that 
the last twenty years exhibit few abuses of this authority. 
It thus appears that the Canadians have appreciated the 
evils of the earlier practice and now avoid them. At 

^ Mr. McNeil — Can. Hansard, 2nd Session, 1896, p. 833. 
2 Quoted in Can. Hansard, 2nd Session, 1896, p. 629. 

70 



EXPENDITURES WITHOUT SANCTION 

the same time it has not been deemed necessary to take 
away from the Governor General the power in question. 
And, as to this, it may indeed be said that if it became 
a fixed and binding tradition that these warrants shall 
not be issued except in cases of real emergency, it may 
be expedient that their legality should remain undis- 
turbed. 

Excess Expenditures. For expenditures under 
orders of the Governor General there is, as we have seen, 
statutory authority. The financial accounts of Canada 
show, however, expenditures for which there is no legal 
warrant. These expenditures occur where by accident 
or by practical necessity the expenditures exceed the 
amounts specifically voted by Parliament. 

The deliberate overriding of the will of the legislature 
by the executive branch was supposedly ended with the 
introduction of responsible government after 1840. 
Yet, without securing the authorization of Parliament, 
the Government of the United Canadas advanced money 
to the Grand Trunk Railway in 1861. In 1862, the 
Government again spent a large sum on the Parliament 
buildings at Ottawa beyond the sum appropriated by 
Parliament and was said ''to have become somewhat 
careless of public interests.'' Such unjustifiable use of 
the public funds was one of the moving causes of con- 
federation. 

The misgovernment and mismanagement of the ad- 
ministration which ruled in Canada from 1855 to 1862 
resulted in the scheme of Confederation.^ 

Up to 1864, in Old Canada, there had been abuses, 
there had been expenditure without parliamentary sanc- 
tion, and the public mind was stirred in regard to these 

^ Sir Charles Hibbet Tupper— Can. Hansard, 1896, 2nd Session, p. 
694. 

71 



THE CANADIAN BUDGETARY SYSTEM 

growing irregularities in connection with the expendi- 
ture of public money/ 

During the first years of responsible government, 
therefore, the Canadian Parliament failed to maintain 
complete control of the public purse strings. For many 
years, now, however, the deliberate disregard by the 
Executive of legislative directions with reference to the 
expenditure of public moneys has not so often occurred, 
and expenditures in excess of parliamentary grants have; 
been for the most part due to oversight or miscalcula- 
tions unavoidable under any system. With regard, 
however, to expenditures on public improvements made 
through the Public Works Department there is fur- 
nished evidence of a reversion to ante-responsible gov- 
ernment conditions. This matter of public works will 
be more specifically discussed in a later chapter. 

In the annual reports of the Auditor General the ap- 
propriation accounts contain four columns under the 
heads, respectively, ''Grant," "Expenditure,'' "Grant 
Not Used" and "Grant Exceeded." All over-expendi- 
tures are thus set forth in detail, and an item is inserted 
in the next Estimates to cover the total amount of these 
excess outlays. Thus in 1909, an appropriation of 
$238,876 was inserted in the Estimates "to cover un- 
provided items 1907-08 as per Auditor General's report." 
This item was explained by the Minister of Finance as 
follows : 

For very many years an item of this character has 
been brought forward. It is a bookkeeping entry which 
the Auditor-General desires for the closing up of his 
accounts. In some branches of the department, it will 
be found that the grants have been greater than the 

1 Sir Richard J. Cartwright — Can. Hansard, 1880, p. 545. 

72 



EXPENDITURES WITHOUT SANCTION 

expenditures, but in some other branches the expenditure 
is somewhat greater than the grant. ... If the excess 
is large, the Auditor-General will refuse to pass it, but 
if small he lets it pass and asks that an indemnity be 
given. In this way $300,000 may seem very large, but 
distributed over the total business of Canada, in a year, 
it is not excessive.^ 

On another occasion it was said: 

At the end of each fiscal year when the expenditures 
under the innumerable appropriations are adjusted, it 
has always been found that here and there throughout 
the service there have been small over-expenditures. 
These are all reported in the Auditor-General's report 
as indicated in the item above, and a sum inserted in the 
supplementary estimates at the next session to legalize 
the total of these over-expenditures. While in the total 
appropriations of a department there may be large 
amounts unexpended, if there is any over-expenditure 
in a subhead of the total vote, such over-expenditure is 
reported by the Auditor-General. The total amount of 
$228,664.18 is made up of amounts from 43 cents up- 
ward. In large and varied services these over-expendi- 
tures are discovered too late to enable a supplementary 
estimate to be made at the time the over-expenditure was 
discovered.^ 

Fixed and Controllable Expenditures. In Canada 
the custom prevails, both in the Dominion and in the 
Provinces, of differentiating between expenditures which 
are required to be made in accordance with the provisions 
of previously enacted permanent statutes, and those 
which are made pursuant to votes approved by the 
legislature when enacting the annual supply bills. 
These two classes of outlays are generally designated 

1 Mr. Fielding — Can. Hansard, 1909, p. 3466. 

2 Sir Thomas White — Can. Hansard, 1916, p. 3271. 

73 



THE CANADIAN BUDGETARY SYSTEM 

as fixed and controllable expenditure and correspond 
respectively to what in England are known as the Con- 
solidated Fund and the Supply Services. In the 
Dominion, however, both classes of expenditures appear 
without differentiation in the report entitled "Public 
Accounts" and in the reports of the Auditor General as 
charges upon the Consolidated Fund. In the "Esti- 
mates," both in the summaries and in the detailed tables, 
the two classes of items are stated in separate columns 
headed respectively "Expenditures authorized by 
Statute" and "Expenditures for which votes of Parlia- 
ment are required." 

The principal items in the Estimates authorized to be 
paid by statute are the interest on the public debt, the 
subsidies to the different provinces and the salaries of 
judges and of other permanent officials. For many 
years these fixed expenditures declined in relative im- 
portance. Constituting $17,597,217.27, or nearly one- 
half of the $36,075,445.97 of the main estimates for the 
fiscal year 1890-91, they formed but $31,291,657.73, or 
barely two-ninths of the $146,786,126.42 original esti- 
mates submitted for the year ending March 31, 191 5. 
Owing to Canada's active participation in the European 
war, however, and the anticipated triplication of the 
debt of the Dominion, the tendency is now the other way. 
For some years to come, at least, the fixed appropriations 
will form an appreciably higher proportion of the 
Dominion government's main estimates than was the 
case during the quinquennial period 1909-14. 



74 



CHAPTER VI 

THE ESTIMATES: PREPARATION AND 
SUBMISSION 

Preparation of the Estimates. In accordance with 
the essential principles of the budgetary system copied 
from Great Britain, every appropriation of public 
moneys by the Parliament must be based upon an 
''estimate" and a recommendation made to it by the 
Executive. This is a requirement imposed by the 
British North American Act itself. Section 54 of that 
instrument provides : 

It shall not be lawful for the House of Commons to 
adopt or pass any vote, resolution, address or bill for the 
appropriation of any part of the public revenue or of any 
tax or impost, to any purpose that has not been first 
recommended to that House by message of the Governor 
General in the session in which such vote, resolution, 
address or bill is proposed. 

In the preparation of the Estimates the usual neces- 
sary routine is followed of requiring the head of each 
department to submit to the Minister of Finance the 
financial needs for the coming year of his own service, 
these demands being of course based in turn upon the 
figures supplied to him by the chiefs of his subordinate 
bureaus. 

In the English system it will be remembered that the 
Treasury sends to each of the accounting officers of the 
several civil services a circular letter directing them to 
prepare and transmit the estimates for the coming year, 
and that this letter contains full instructions as to the 
form in which these estimates are to be drawn up ; new 

75 



THE CANADIAN BUDGETARY SYSTEM 

proposals must be explained, comparative data supplied, 
and all requests justified even though no increases are 
asked for. The necessity for economy is also em- 
phasized/ 

It would appear that in Canada, because of the lesser 
general financial control granted to the Ministry of 
Finance, no such guiding and controlling instructions 
are issued. The standard letter requesting from the 
several departments their estimates reads as follows: 

Finance Department, 
Ottawa, Canada. 
The Deputy Minister, 

Ottawa. 
Sir: 

By direction of the Minister of Finance I have the 
honour to request that you will be good enough to for- 
ward to this Department as soon as possible the estimates 
of the various services of your Department for the finan- 
cial year ending the 31st March, 191 8. 

I have also to request that you will furnish at the same 
time full information explanatory of the services pro- 
vided for, especially in the cases of new or increased 
charges. 

I have the honour to be. Sir, 

Your obedient servant. 

Deputy Minister of Finance. 

The Minister of Finance, or rather the Deputy Min- 
ister, who is the active administrative head of the 
Finance Department, is expected to scrutinize with care 
the various departmental estimates sent in to him, with a 
view to seeing that they are reasonable in amount, and 
that, in the aggregate, they do ndt go beyond the amount 

1 For the text of this circular letter together with comments thereon, 
see the report by the Institute for Government Research on the "System 
of Financial Administration of Great Britain," pp. 52ff. 

76 



PREPARATION OF ESTIMATES 

that the Government deems may expediently be asked of 
Parliament. Where deductions are considered desirable 
the matter is taken up more or less informally with the 
minister concerned and the effort made to obtain his 
agreement thereto. The entire estimates are then 
brought before the Cabinet as a whole for approval and 
decision upon points which have not been fully decided, 
and when submitted to the House of Commons have, of 
course, the political support of the Government as a 
whole. It still remains true, however, that the individ- 
ual ministers are held especially responsible for the esti- 
mates appertaining to their respective departments. 

Under responsible government, the minister cannot 
ask a vote from this House without first being convinced 
himself of the absolute necessity of the expenditure ; then 
he must convince his colleagues that the vote should be 
submitted to the House, and then he must have the 
approval of the Governor-General on the ground that 
the expenditure is in the public interest.^ 

Control by the Minister of Finance. In this ac- 
count of the preparation of the Estimates it will of course 
be seen that though the Minister of Finance may have 
a certain amount of personal or political influence upon 
the other ministers, there is no approach to that system 
of effective Treasury control which is such a con- 
spicuous and beneficent feature of the British financial 
system. The Canadian Cabinet as a body has, as has 
been said, and must have under any true system of 
cabinet government, a final determination as to the esti- 
mates which are to be submitted to the Parliament. 
But this is a kind of control which is far different from, 
and much less effective than, the control exercised by 

^ Hon Mr. Haggart — Can. Hansard, 1903, p. 1262. 

77 



THE CANADIAN BUDGETARY SYSTEM 

the British Treasury which is not itself, except in very 
slight measure, a spending service, but has for its 
function the maintenance of a day-to-day control over 
expenditures in the other services, and whose approval 
must be asked before an estimate can be included in the 
budget/ The slight degree of supervising and mod- 
erating authority exercised by the Canadian Ministry 
of Finance is shown in the practice, which will be 
presently referred to, of inserting in the Estimates many 
items which are urged by private members of Parlia- 
ment. 

It is required by law in Canada that *'the Governor-in- 
Council shall, from time to time, determine the number 
of officers, chief clerks, clerks, messengers and other 
employees required for the workings of the several de- 
partments in each division of the public service/'^ Thus 
the ultimate responsibility for any increase in the num- 
ber of official servants is placed on the entire Cabinet. 
The procedure to be followed when such an increase is 
desired has thus been described: 

The House is entitled to have the opinion of the Cabi- 
net before any proposition is submitted to it to change 
the organization of any department. We are entitled 
to have first the recommendation to the ministers at the 
head of the department made by the deputy head. That 
recommendation ought to be on record. Then the matter 
should be brought before the Governor-in-Council and 
considered, and it is only on the approval of the Gov- 
ernor-in-Council that the minister at the head of the 
department has a right to ask Parliament to vote the 
money. This is not a mere matter of form. We are 
entitled to have the guarantee and pledge of the 

^Appeals from decisions of the Treasury may be taken by the min- 
isters concerned to the Cabinet as a whole, but these are not frequent. 
2 Civil Service Law, Section 6. 

78 



PREPARATION OF ESTIMATES 

Governor-in-Council that the necessity exists for the 
change/ 

Estimates for Public Works. When it comes to 
the initiation of pubHc works, however, the salutary 
principle that the minister of the department must first 
be persuaded of the desirability of the proposed im- 
provement is not strictly adhered to. Initial grants for 
new public works are only too frequently inserted in the 
Estimates upon the urging of some member of Parlia- 
ment. Formerly requests for appropriations for pub- 
lic works were generally made by petition. 

It has been the invariable rule to allow the application 
to come from the people themselves. I have not gone 
to the Minister and asked him to make an appropriation 
simply on my own authority, but I have done it on the 
strength of a well-circulated and well-signed petition 
from the people of the community interested in that 
work. We place that before the Minister and he then 
sends down his engineer to inquire into the utility of this 
work." 

During recent years, the practice has arisen of insert- 
ing appropriations of this character in the Estimates 
merely because they were recommended by members of 
the House of Commons. This system of making appro- 
priations has been warmly defended by certain party 
leaders. 

There is nothing wrong in a Minister taking a state- 
ment from a member of Parliament in whom he has 
confidence that a certain work in his county is necessary 
and desirable and putting a moderate appropriation in 
the estimates for that work, provided that the Minister, 
before he spends the money, has a proper investigation 

^ Mr. Lennox — Can Hansard, 1903, p. 336. 
2 Mr. Mills — Can. Hansard, 1898, p. 7621. 

79 



THE CANADIAN BUDGETARY SYSTEM 

made by his engineer and satisfies himself that the work 
is going to serve a useful purpose.^ 

What the inevitable outcome of this policy must be has 
been described as follows : 

What is the basis of estimates submitted to the House ? 
That the public work is necessary, that it is known to 
be necessary by the Minister, who proposes the plan, that 
he will have the information, the plan, what he proposes 
to expend, the probable cost of the work, and the benefit 
of the work to submit to the House to justify the vote. 
Fancy a Chancellor of the Exchequer in Great Britain 
allowing a Minister to come down with a vote in this 
way and justifying it on the broad doctrine that all you 
have to do in order to get the House to vote your esti- 
mates is to have a request from a member who represents 
the county, with the statement of that member, that the 
work is one of necessity. Therefore you are going to 
make estimates on the request of members of Parlia- 
ment.^ 

But if items are inserted in the Estimates at the re- 
quest of legislators and they are permitted to say what 
expenditure shall be undertaken by the Public Works 
Department, the way is opened for the recurrence of the 
very evils which the English system of responsible gov- 
ernment was to do away with. Under that system, the 
Ministry alone is supposed to be convinced of the wis- 
dom of any proposed expenditure, and it was for that 
reason that the right to initiate money votes was taken 
away from the representatives of the people. But while 
nominally deprived of this right, the Canadian members 
of Parliament have, in the course of time, more or less 
regained it as far as the important Public Works De- 
partment is concerned, which affords the greatest op- 

^ Hon. Mr. Fielding — Can. Hansard, 1898, p. 7599. 
2 Mr. Foster — Can. Hansard, 1898, p. 7608. 

80 



PREPARATION OF ESTIMATES 

portunities for corrupt and wasteful government ex- 
penditure. 

Cabinet Control. After the individual ministers 
have determined the extent of the appropriations re- 
quired to carry on the work of their departments for 
the coming twelve months, the Cabinet as a whole passes 
upon the various requests submitted. As a rule, the 
demands asked for are not granted in full, but more or 
less radical reductions take place before the Estimates 
are deemed to be in a sufficiently satisfactory shape for 
submission to Parliament. In the language of a former 
Minister of Finance : 

This was my practice : I never allowed the Estimates 
to go out of Council to be brought down to this House 
until I had set before Council, in the first place, the 
amount for capital and the amount for ordinary expendi- 
ture which was asked, and then discussed the question 
with my colleagues as to about how far we could go. 
After we had settled that, the cutting down process took 
place.^ 

Once the nature of the Estimates has been determined 
by the whole Cabinet, the approval of the Governor 
General follows as a matter of course. He would in no 
event venture to disagree with the conclusions of his 
responsible advisers regarding the amounts to be spent 
on the various government services so long as they com- 
manded a majority of the Lower House. 

In determining the extent of the appropriations to be 
recommended to Parliament, the state of the public 
revenue is naturally taken into consideration. If pros- 
perous conditions prevail and the national receipts ex- 
ceed the amount anticipated, liberal appropriations and 

i Mr. Foster — Can. Hansard, 1896, 2nd Session, p. 2462. 

81 



THE CANADIAN BUDGETARY SYSTEM 

large supplementary estimates are the rule. Thus, the 
Dominion main estimates for the fiscal year 191 3-14, 
when good times reigned in Canada, totalled $125,- 
850,338.28 or $8,031,856.53 more than all the appro- 
priations voted for 191 2- 13. Not content even with 
this notable increase, the Government later had sup- 
plementary estimates passed amounting to $17,361,- 
476.64. On the other hand, when a period of financial 
depression has set in, a reduction in the estimates has 
been seen. Thus in 1909 Mr. Fielding reduced his esti- 
mates for the fiscal year 1909-10 over the preceding 
year by $22,581,000, of which nearly $9,500,000 was for 
ordinary and not capital expenditure. 

Should the anticipated revenue prove insufficient 
to defray the government's expenditures even after all 
reductions in the estimates have been made, the initial 
suggestion as to new methods of taxation to cover the 
deficit rests with the Cabinet. But changes in taxation 
are comparatively infrequent in Canada for the reason 
that most of the national and provincial revenues are 
derived from permanent statutes which do not have to 
be reenacted annually like the English income tax. 

When the requirements of the various government 
services for the approaching fiscal year are under con- 
sideration, the estimate finally arrived at is supposed to 
give the maximum anticipated outlay. No obligation 
rests on the Government, however, to spend the sum 
asked for. 

When I ask for a certain sum, it is not that I mean to 
say the Government intends to spend the whole, but that 
such is the limit within which the Government hopes to 
keep their disbursements for the term.^ 

1 Hon. Christopher Dunkin, Financial Statement (Quebec) 1868, 
p. 14. 

^2 



PREPARATION OF ESTIMATES 

Submission. When the time for the meeting of 
the Dominion Parliament arrives, the opening of the 
parliamentary session is signalized by a formal address 
of the Governor General delivered in person to the two 
legislative chambers. In this speech the condition and 
progress of Canada are reviewed and any proposed new 
legislation which the Ministry may have in contem- 
plation is recited/ In addition, the members of the 
House of Commons are told that "the public accounts for 
the last year and the Estimates made for the succeeding 
year" will be laid before them without delay. 

Pursuant to this promise the Governor General, gen- 
erally within a short period after Parliament has been 
convened, transmits to the House, vnth a written mes- 
sage, the Estimates, as approved by the Cabinet, of the 
sums required to carry on the various public services for 
the coming fiscal year, and expressly recommends them 
to the House. The same procedure is followed when 
supplementary estimates have to be passed to provide 
for services which have been either inadvertently over- 
looked in the main estimates or newly established by 
Parliament. 

Distinction between General and Supplementary 
Estimates. In principle a fairly clear distinction is 
made between the Estimates submitted soon after the 
convening of Parliament and constituting the expendi- 
ture statement of the budget and the Estimates sub- 
mitted at a later date. The first, known as Main Esti- 
mates, or simply Estimates, generally speaking, include 

' "It is well understood that the formality of a Speech from the 
Throne — a formality which, like many of our institutions is derived from 
the Mother Country — is intended to enable a brief reference to be made 
to matters of administration and to convey to Parliament an idea of the 
important measures which will be submitted for their consideration." 
Mr. Hazen — Can. Hansard, 1891, p. 8. 

83 



THE CANADIAN BUDGETARY SYSTEM 

only the figures for services and governmental activities 
already in operation. The estimates for distinctly new 
undertakings are ordinarily reserved for the supple- 
mentary estimates which are later presented. 

It is not customary to place in the Main Estimates 
votes for works which are not initiated. The Main 
Estimates contain only votes for works which have been 
begun, and that is the reason why many works which 
will find a place in the Supplementary Estimates are not 
mentioned here.^ 

It has been the custom of the Public Works Depart- 
ment, or at least for many years, to provide for new 
works in the Supplementary Estimates of the year.^ 

The practice has been in the past to put in the Main 
Estimates items for all works provided for previously 
and not yet proceeded with, and in the Supplementary 
Estimates items for new works. ^ 

But it should be remembered that the items in the sup- 
plementary estimates do not consist of votes for new 
public works alone. 

1 said that all new works are in the supplementary 
estimates, but that does not mean that the supplementary 
estimates may not contain many items for other than 
new works.* 

If any appropriation for a new public work has been 
once passed in the supplementary estimates, it is no 
longer regarded as a new item but is thereafter revoted 
as a part of the main estimates. Should it then be 
stricken out for any reason from the main estimates be- 
fore any part of the money voted has been actually ex- 

^ Mr. Tarte — Can. Hansard, 1897, p. 2729. 

2 Hon. Mr. Sutherland, Minister of Public Works — Can. Hansard, 
1903, p. 13029. 

^^ Mr. Pugsley— Can. Hansard, 1911-12, p. 2366. 
* Hon. Mr. Tarte, Minister of Public Works — Can. Hansard, 1902, 
p. 4619- 

84 



PREPARATION OF ESTIMATES 

pended, any contemplated new appropriation in aid of 
the proposed improvement must be again put through 
the supplementary estimates. 

In the former estimates, Nova Scotia had for harbors 
and rivers $1,309,166 and in the present estimates only 
$445,075. Therefore the large sum of $824,066 has dis- 
appeared from the estimates of the Province of Nova 
Scotia. I understand from my honorable friend that a 
large amount of that money is to be replaced in the sup- 
plementary estimates ; but why he should go through the 
form of striking them out of the estimates and putting 
them back a few weeks later has puzzled me/ 

Thus, in the Canadian budget practice, the supple- 
mentary estimates are not limited simply to making pro- 
vision for unforeseen expenditures. The objection to 
making such a use of supplementary estimates will be 
discussed later on.^ Apparently the enlargement in 
their scope arose from a desire to facilitate the making 
of comparisons. By placing all items for new public 
improvements in the supplementary estimates, and by 
having the main estimates contain only appropriations 
for current governmental purposes, it was thought that 
the extent to which the party in power was conducting 
the affairs of the Dominion economically or extrava- 
gantly could be better determined. At least, no better 
explanation suggests itself for the original inclusion 
within the Canadian supplementary estimates of items 
of new expenditure for public works, which could have 
been readily prepared in advance and in time to be in- 
serted in the main estimates. 

In presenting supplementary estimates a distinction, 
however, is made between those having for their purpose 

^ Mr. Sinclair — Can. Hansard, 1911-12, p. 2437. 
- See p. 260. 

85 



THE CANADIAN BUDGETARY SYSTEM 

the supplementing of appropriations for the current year 
and those relating to the year to come. Those of the 
first character are suggested and submitted as a separate 
estimate. None thus correspond to what are known as 
deficiency estimates in the United States. It is unfor- 
tunate that they are not so styled in order that the dis- 
tinction between them and supplementary estimates 
proper might be more clearly maintained. 

Form of the Estimates. The general Estimates 
ordinarily form an octavo volume of approximately one 
hundred printed pages. The first table presented is a 
general summary of the total estimates classified by 
main services of the government. For each service 
there is shown the amount to be voted for the year to 
be financed, the amount already provided for by statute, 
the total of these two amounts, the corresponding total 
for the year in progress, and the increase or decrease of 
the former in comparison v/ith the latter. The follow- 
ing table taken from the Estimates for 191 8 shows the 
character of information given by this summary. 



86 



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88 



PREPARATION OF ESTIMATES 

From this summary it will be seen that the estimates 
of expenditure from the Consolidated Fund are grouped 
under forty-three heads. With a few exceptions, these 
heads represent distinct services of the government, 
each conducted by a separate bureau, or, in not a few 
cases, by a separate department. The estimates of the 
cost of the offices of those bureaus or departments at 
Ottawa are, however, gathered together under the single 
head "Civil Government.'' 

Following this summary are given, in the same order 
of services, the estimates proper arranged under appro- 
priation heads or "votes" as they are technically called. 
In each case the estimates for the preceding year are 
given and the increase or decrease shown. Under each 
service is also given a table showing the items of ex- 
penditure already authorized by statute. 

For illustrative purposes there are reproduced here- 
with the "votes" for the service "Civil Government" in 
the Estimates for 19 17-18. 



89 



III.~-.CIVIL 

Amount to be voted 



GOVERNMENT 



,$7,224,561.00 



1^ 



Departments. 



1917-18, 



1916-17. 



Compared with 
Estimates of 1916-17. 



Increase. 



Decrease. 



10 



12 



(A) Estimates of expendi- 
ture FOR WHICH Votes 
OF Parliament are 
Required. 

Governor General's Secre- 
tary's Office — 

Salaries 

Contingencies, including al- 
lowance of $600 to Pri- 
vate Secretary 

Privy Council Office — 

Salaries 

Contingencies 

Administration of Justice — 

Salaries, including J. P. Bill, 
at $4,000. and Miss G 
Avery, promoted to Sec 
ond Division, Subdivi- 
sion B, at $1,200 

Contingencies 

Department of Militia and 

Defence — 

Salaries, including H. M. 
Garrison at $1,850 

Contingencies 

Department of the Secretary 

of State- 
Salaries including P. T. Kir- 
wan, promoted to First 
Division, Subdivision B 
J. F. Champagne, pro- 
moted to Second Division, 
Subdivision A; M. J 
Birdwhistle, promoted to 
Second Division, Subdivi 
sion Bat $1,200 

Contingencies 

Department of Public Print 

ing and Stationery — 

Salaries 

Contingencies 

Department of the Interior — 

Salaries 

Contingencies 

DepartmentoflndianAffairs — 

Salaries 

Contingencies 

Royal Northwest Mounted 

Police — 

Salaries 

Contingencies 

Office of the Auditor General — 

Salaries, including Assistant 
Auditor General at $4,500 

Contingencies 

Department of Finance and 

Treasury Board — 

Salaries, including Assistant 
Deputy Minister at 
$4,500; Comptroller of 
Dominion Currency at 
$4,500; Accountant of 
Contingencies at $3,000; 
Commissioner of Taxa- 
tion at $5,000; Assistant 
Commissioner of Taxa- 
tion at $3,500 

Contingencies 



(a) 



ib) 



ic) 



(d) 



(e) 



(/) 



(g) 



(h) 



it) 



(;•) 



m 



26.250 00 



66,600 00 



49,412 50 
10,000 00 



154.437 50 
21,000 00 



187,700 00 
19.500 00 



76,737 50 
16,000 00 



65,762 50 
10,300 00 



1,191,255 00 
115,000 00 



126,862 50 
21,550 00 



21.712 50 
1 , 700 00 



143,850 00 
16.500 00 



151,512 50 
30,000 00 



25,600 00 



66,900 00 



47,962 50 
10.000 00 



150,224 37 
21,000 00 



182,800 00 
19,500 00 



77,412 50 
16,000 00 



70,662 50 
10,300 00 

1,171,655 00 
120,000 00 

125,700 00 
21,550 00 



20,650 00 
1,700 00 



138,350 00 
16,500 00 



138.125 00 
28.000 00 



$ cts. 



650 00 



300 00 



1,450 00 



4,213 13 



4,900 00 



19,600 00 



675 00 



4.900 00 



S.OOO 00 



1.162 50 



1,062 50 



5,500 00 



13,387 SO 
2,000 00 



90 



Departments. 



(A) Estimates of expendi- 
ture FOR WHICH Votes 
OF Parliament are 
Required. 

Department of Customs — (/) 

Salaries 

Contingencies 

Department of Inland Reve 

nue — (w) 

Salaries 

Contingencies 

Department of Agriculture — («) 

Salaries 

Contingencies 

Department of Marine and 

Fisheries — (o) 

Salaries, including A. R. 
Tibbits, transferred from 
the outside service at 
$2,800 

Contingencies 

Department of Naval Ser- 
vice — iP) 

Salaries 

Contingencies 

Department of Railways and 

Canals — (q) 

Salaries, including Assistant 
to Minister at $4,500; F, 
M. Maclennan at $1,800 
R.H.Lang at $1,800... . 

Contingencies 

DepartmentofPublicWorks — {r) 

Salaries 

Contingencies 

Department of Mines — (s) 

Salaries 

Contingencies 

Post Office Department — (0 

Salaries 

Contingencies 

Department of Trade and 

Commerce — (m) 

Salaries 

Contingencies 

Department of Labour — (v) 

Salaries 

Contingencies 

High Commissioner's Office 

London — (w) 

Salaries 

Contingencies 

Departments Generally — (x) 

Contingencies — Care and 
cleaning of Departmental 
Buildings, including 
amount of $100 to E. 
Snowdon for firing noon 

gun 

General Consulting Engineer 

to Dominion Government — (y) 

Salaries 

Contingencies 

Department of Insurance — (z) 

Salaries 

Contingencie.s 

Department of External Af- 
fairs — (2a) 

Salaries 

Contingencies 



1917-18. 



328,100 00 
25,000 00 



180,412 50 
22.000 00 



490,675 00 
100,000 00 



207,950 00 
32,000 00 



188,950 00 
50,000 00 



182,987 50 
28,000 00 



590,250 00 
85,000 00 



381,985 00 
5,500 00 



842,820 00 
125,000 00 



133,700 00 
15,000 00 



54,137 50 
15.000 00 



21,650 00 
58,151 00 



275,000 00 



7,600 00 
150 00 

30.737 50 
26.000 00 



34,512 50 
15,500 00 



328,237 50 
20,000 00 



173.250 00 
20,000 00 



470,612 50 
100,000 00 



217,000 00 
46,000 00 



180,950 00 
50,000 00 



175,712 50 
28,000 00 

579.516 00 
85,000 00 

368,312 50 
7.000 00 

819,370 00 
125,000 00 



131,912 50 
15,000 00 



54,012 50 
15,000 00 



20,550 00 
36,676 00 



220,000 00 



7,600 00 
150 00 



29,162 50 
25.500 00 



31.450 00 
9.500 00 



Compared with 
Estimates of 1916-17. 



Increase. 



5.000 00 



7,162 50 
2,000 00 



20,062 50 



8,000 00 

7,275 00 
10,740 00 
13,672 50 
23,450 00 

1.787 50 
125 00 



1 , 100 00 

21,475 00 



55.000 00 



1.575 00 
500 00 



3.062 50 
6,000 00 



Decrease. 



137 50 



9,050 00 
14,000 00 



1 , 500 00 



91 



1^ 



Departments. 



1917-18. 



1916-17. 



Compared with 
Estimates of 1916-17. 



Increase. 



Decrea9€. 



{A) Estimates of bxpendi 

TURK FOR WHICH VOTES 

OF Parliament are 
Required, 

OflSce of the Conservation 

Commission — 

Salaries 

Department of Public Ar 

chives — 

Salaries 

Contingencies 

Civil Service Commission — 

Salaries 

Contingencies 



(5) Expenditure Author- 
ized BY Statute 

Salary of the Governor General 
Salary of the High Commis- 
sioner of Canada in England 
Salary of the Lieut.-Governor 

of Ontario 

Salary of the Lieut.-Governor 

of Quebec 

Salary of the Lieut.-Governor 

of Nova Scotia 

Salary of the Lieut.-Governor 

of New Brunswick 

Salary of the Lieut.-Governor 

of Manitoba 

Salary of the Lieut.-Governor 

of British Columbia. . . . 
Salary of the Lieut.-Governor 

of Prince Edward Island 
Salary of the Lieut.-Governor 

of Alberta 

Salary of the Lieut.-Governor 

of Saskatchewan 

Salary of Fifteen Ministers, 

at $12,000, 14 at $7,000.. 
Salary of the Solicitor General 
Salary of the Governor-Gen- 
eral's Secretary 

Salary of the Auditor General 
Salary of the Superintendent 

of Insurance 



SUMMARY 



To be voted 

Authorized by Statute. 



(eft) 
(zc) 



$ Ci6. 



37,650 00 



53,425 00 
7.500 00 



33,075 00 
15,500 00 



cts. 



36,100 00 



52,925 00 
7,500 00 



32,587 50 
15,500 00 



1,550 00 
500 00 
487 50 



7,224,561 00 



48,666 66 

10,000 00 

10,000 00 

10,000 00 

9.000 00 

9,000 00 

9.000 00 

9,000 00 

7,000 00 

9.000 00 

9,000 00 

110,000 00 
5,000 00 

2,400 00 
5,000 00 

5,000 00 



7,015,672 87 



48,666 66 

10,000 00 

10,000 00 

10,000 00 

9.000 00 

9,000 00 

9,000 00 

9.000 00 

7.000 00 

9,000 00 

9,000 00 

110,000 00 
5,000 00 

2,400 00 
5,000 00 

5,000 00 



208,888 13 



267,066 66 



267,066 66 



7.224,561 00 
267,066 66 



7,015,672 87 
267,066 66 



208,888 13 



Total. 



7,491,627 66 



7.282,739 53 



208,888 13 



92 



PREPARATION OF ESTIMATES 

It is the aggregate of the several tables of "estimates 
of expGnditure for which votes of Parliament are re- 
quired," similar to the foregoing, which alone forms the 
subject of action by Parliament. Detailed explanations 
of the items entering into the several totals may be, and 
indeed in the case of many of the totals always are, pre- 
sented to Parliament for its information, but its action 
is by practice confined merely to allowing or reducing 
the total amounts listed in the tables of votes. It is these 
tables alone that, with the reductions in amounts de- 
termined on by Parliament, are included in the appro- 
priation act. It need hardly be pointed out, therefore- 
that the degree of itemization embodied in these tables of 
votes is of the utmost importance in exhibiting the degree 
of control which is exercised by Parliament over the 
allotment of funds by the Executive. 

In examining these tables it should be borne in mind 
that only the total amount granted under each 'Vote'' is 
binding on the executive, regardless of the distribution 
of that amount among the several items which may be 
listed under the "vote." Thus, in the table of votes 
under the head of "Civil Government," just presented, it 
will be seen that while the numbered "votes" total only 
thirty, each numbered "vote" is divided under the two 
heads of "Salaries" and "Contingencies," and this two- 
fold division of each "vote" is the standing practice for 
the estimates of the regular administrative departments. 
Certain of the votes, moreover, are divided into a much 
greater number of subheads, the number in some cases, 
as in Vote No. 128, for Harbors and Rivers, Quebec, 
running as high as thirty-nine, the amount allowed for 
each improvement being separately listed. 

Of late years, the tendency has apparently been in the 

93 



THE CANADIAN BUDGETARY SYSTEM 

direction of a reduction in the number of 'Votes'" and 
subdivisions of votes presented and a corresponding in- 
crease in the number of requests for lump sums. That 
this tendency has not escaped objection as making a 
strict parhamentary control of government disburse- 
ments more difficult is evidenced by the following out- 
burst of indignation : 

This is a most outrageous way of bringing down Esti- 
mates. Here you have a lump sum, of $700,000. . . . 
This sum of money can be spent as the Minister chooses; 
Parliament has no chance to arrange it or limit it. These 
sums should be voted by Parliament so that they cannot 
be juggled with — they cannot be changed in the depart- 
ment. As it is, this is the blindest kind of way of making 
estimates.' 

As already stated, there is presented, in connection 
with some of the ''votes," supporting schedules setting 
forth in great detail the items making up the estimated 
total. Particularly is this true of votes caUing for large 
sums for "Salaries" in the administrative departments. 
But it should be kept clearly in mind that this detailed 
itemization is intended solely for the information of 
Parliament, is not acted upon by it, and does not appear 
in the appropriation act. Once the total listed in the 
table of votes is granted by Parliament, the Executive is 
free to allot that total in any manner deemed best, with- 
out being bound in the slightest degree by the itemization 
appearing in the supporting schedules of the Estimates. 

The following detailed schedule, supporting the esti- 
mate for Vote No. 8, Department of the Interior, in the 
table of votes under "Civil Government," just presented, 
is typical of the degree and form of itemization presented 

1 Mr. Foster — Can. Hansard, 1908-09, p. 7016. 

94 



Number of 




Salaries 


Employees 


(a) Department of the Interior 






1917-18 


1916-17 


1917-18 


1916-17 








$ cts. 


$ cts. 


1 


1 


Deputy Minister 


5,000 00 


5,000 00 


23 


23 


First Division, Subdivision A: — 

6 at $4,000; 1 at $3,975; 2 at $3,750; 2 at 
$3,675; 5 at $3,400; 1 at $3,300; 2 at 
S3.200; 2 at $3,100; 1 at $3,050; 1 at 




. 




61 


$2.850 


81,625 00 


81,175 00 


61 


First Division, Subdivision B:— 








30 at $2,800; 3 at $2,700; 1 at $2,675; 1 at 










$2,650; 2 at $2,600; 9 at $2,500; 9 at 










$2,400; 1 at $2,350; 1 at $2,325; 1 at 










$2,275; 1 at $2,250; 1 at $2,225; 1 at 










$2.200 


160,350 00 


157,850 00 


116 


116 


Second Division. Subdivision A: — 

29 at $2,100; 1 at $2,075; 2 at $2,000; 1 at 
$1,975; 1 at $1,962.50; 2 at $1,950; 1 at 
$1,937.50; 9 at $1,900; 4 at $1,887.50; 

1 at $1,875; 11 at $1,850; 2 at 
$1,837.50; 1 at $1,825; 2 at $1,812.50; 
16 at $1,800; 21 at $1,750; 3 at $1,700; 

2 at $1,687.50; 3 at $1,675; 1 at 
$1,662.50; 1 at $1,650; 1 at $1,637.50; 








249 


1 at $1.625 


218,375 00 


215.687 50 


249 


Second Division, Subdivision B: — 








33 at $1,600; 13 at $1,575; 1 at $1,537.50; 










5 at $1,525; 1 at $1,500; 1 at $1,487.50; 










31at$l,475;lat$1.450;lat$1.437.50;7 










at$1.425;2at$1.412.50;8at$l,400;4at 










$l,387.50;33at$l,375;lat$l,362.50; 










6 at $1,350; 4 at $1,337.50; 15 at 










$1,325; 2 at $1,312.50; 1 at $1.305 ; 5 at 










$1,300; 1 at $1,287.50; 5 at $1,275; 2 at 










$1,262.50; 1 at $1,250; 1 at $1,237.50; 










lat$1.225;3at$l,200;2at$l,187.50; 










1 at $1,175; 4 at $1,137.50; 3 at $1,125; 










2 at $1,112.50; 4 at $1,100; 5 at 










$1,087.50; 1 at $1,075; 1 at $1,062.50; 










1 at $1,050; 2 at $1,037.50; 2 at $1,025; 










7 at $1,012.50; 2 at $987.50; 3 at 










$962.50; 2 at $950; 4 at $937.50; 1 at 










$925; 1 at $912.50; 2 at $887.50; 2 at 










$875; 2 at $862.50; 3 at $850; 1 at 








189 


$837.50; 2 at $825 


332.155 00 


326.542 SO 


189 


Third Division, Subdivision A: — 








91 at $1,200; 1 at $1,175; 8 at $1,150; 1 at 










$1,137.50; 4 at $1,125; 34 at $1,100; 










2 at $1,087.50; 1 at $1,075; 2 at 










$1,062.50; 26 at $1,050; 1 at $1,037.50; 










3 at $1,025; 2 at $1,012.50; 1 at $1,000; 










1 at $987.50; 1 at $975; 2 at $962.50; 










1 at $937.50; 2 at $925; 5 at $912.50 . . 


213.662 50 


209.650 00 


190 


190 


Third Division. Subdivision B: — 

50 at $800; 10 at $787.50; 2 at $775; 7 at 
$762.50; 2 at $750; 5 at $737.50; 6 at 
$725; 6 at $712.50; 2 at $700; 15 at 
$687.50; 3 at $675; 5 at $662.50; 3 at 
$650; 20 at $637.50; 21 at $625; 3 at 
$612.50; 2 at $600; 2 at $587.50; 4 at 
$562.50; 7 at $550; 2 at $537.50; 3 at 










$525; 1 at $512.50; 9 at $500 


131.425 00 


128,812 SO 


68 


68 


Messengers, sorters and packers: — 

23 at $800; 1 at $787.50; 2 at $750; 1 at 
$737.50; 5 at $725; 2 at $712.50; 2 at 
$700; 6 at $687.50; 1 at $662.50; 11 at 
$650; 2 at $637.50; 1 at $6250 2 at 
$612.50; 4 at $600; 1 at $575; 1 at 










$562.50; 1 at $537.50; 2 at $525 


48.062 50 


46,337 SO 






Allowance for Private Secretary 


600 00 


600 00 




Contingencies 




897 


897 


1.191,255 00 


1,171,655 00 














Clerical assistance 


20,000 00 
45 000 00 


20,000 00 




Printing and stationery 


45,000 00 






Travelling expenses and sundries 


50 ; 000 00 


SsioOO 00 










115.000 00 


120,000 00 



THE CANADIAN BUDGETARY SYSTEM 

in support of estimates for the administrative depart- 
ments. 

With reference to the foregoing table, it may be sug- 
gested that if the enumeration of the number of clerks 
at the different rates of salaries were given in columnar 
form instead of being printed solid, not only would a 
clearer showing be made of the personnel of each serv- 
ice, but the changes proposed in such personnel would 
be more effectively exhibited. Doubtless such a criti- 
cism would, however, have more force were this 
itemization intended to be legally controlling upon the 
Executive, instead of being presented, as already stated, 
only for purposes of general information. 

The slight degree of itemization presented in support 
of the estimates for '^Contingencies'' is striking, for that 
term is used in a sense widely different from that at- 
tached to it in American budgetary practice, namely, to 
include all types of services and supplies — in fact, every- 
thing except regular salaries. 



96 



CHx^PTER VII 

THE ESTIMATES: ACTION UPON IN 
PARLIAMENT^ 

Money Bills Originate in the Commons. Section 
53 of the British North America Act provides that "Bills 
for appropriating any part of the public revenue, or for 
imposing any tax or impost shall originate in the House 
of Commons." 

In pursuance of this requirement and in order that 
precipitate action may be prevented, a standing order of 
the House of Commons provides that : 

All aids and supplies granted to his Majesty by the 
Parliament of Canada are the sole gift of the House 
of Commons, and all bills for granting such aids and 
supplies ought to begin with the House, as it is the 
undoubted right of the House to direct, limit, and 
appoint in all such bills, the ends, purposes, consider- 
ations, conditions, limitations and qualifications of 
such grants which are not alterable by the Senate. 

The established attitude of the Senate towards revenue 
or appropriation bills is stated by Bourinot as follows :^ 

Since 1870, no attempt has been made in the Senate 
to throw out a tax or money bill. The principle 
appears to be acknowledged on all sides, that the 
upper chamber has no right to make any material 
amendment in such a bill, but should confine itself to 
mere verbal or literal corrections. Without abandon- 
ing their abstract claim to reject a money or tax bill 
when they feci they are warranted by the public 

^ In the preparation of this chapter the greatest assistance has been 
obtained from the able work of Bourinot, Parliamentary Procedure and 
Practice in the Dominion of Canada, 4th ed., 1916. In a number of 
paragraphs the author has simplj'^ summarized Mr. Bourinot's presen- 
tation. 

2 Bourinot, p. 2S5. 

97 



THE CANADIAN BUDGETARY SYSTEM 

necessities in resorting to so extreme a measure, the 
Senate is now practically guided by the same prin- 
ciple which obtains with the House of Lords and 
acquiesces in all those measures of taxation and 
supply which the majority in the House of Commons 
have sent up for their assent as a coordinate branch 
of the legislature. The Commons, on the other hand, 
acknowledge the constitutional right of the Senate to 
be consulted on all matters of public policy. 

The Senate doubtless aims to keep closely within 
its constitutional functions. That house has declined 
to appoint a committee to examine and report on the 
public accounts, on the ground that while the Senate 
could properly appoint a committee for a specific 
purpose — that is, to inquire into particular items of 
expenditure — they could not nominate a committee, 
like that of the Commons, to deal with the general 
accounts and expenditures of the dominion— a sub- 
ject peculiarly within the jurisdiction of the lower 
House. It is legitimate, however, for the Senate to 
institute inquiries, by their own committees, into cer- 
tain matters or questions which involve the expendi- 
ture of public money. But the committee should not 
report recommending the payment of a specific sum 
of money, but should confine themselves to a general 
expression of opinion on the subject referred to them. 

Tacking. The Senate has a standing rule which 
declares that "to annex any clause to a bill of aid or 
supply, the matter of which is foreign to and dififerent 
from the matter of the bill, is unparliamentary.'' And 
Bourinot is authority for the statement that no modern 
example of its infringement has occurred.^ 

Appropriations must be Recommended by the 
Executive. In strict conformity with the English 

^ Bourinot, p. 290. 

98 



PARLIAMENTARY ACTION UPON ESTIMATES 

parliamentary principles, the Canadian rule is that no 
measure authorizing the expenditure of public moneys 
shall be considered except such as have been recom- 
mended to the legislature by the Executive. It is, in- 
deed, provided in the British North America Act itself 
that : 

It shall not be lawful for the House of Commons 
to adopt or pass any vote, resolution, address, or bill 
for the appropriation of any part of the public reve- 
nue, or of any tax or impost, to any purpose that has 
not been first recommended by a message of the 
Governor-General in the session in which such vote, 
resolution, address or bill is proposed/ 

It will be observed that this provision does not go quite 
as far as does the standing order of the British House 
of Commons which declares that no petition shall be 
received for any sum relating to the public service. 
Bourinot is, however, authority for the statement that, 
under decisions of its speakers, this prohibition is in- 
variably applied in the Canadian House.^ Bourinot 
continues : 

The constitutional provision which regulates the 
procedure of the Canadian Commons in this respect 
applies not only to motions directly proposing a grant 
of public money, but also to those which involve a 
grant, such as loans and guarantees. A member who 
has not received the permission of the Crown has not 
been allowed to move the House into committee on a 
resolution providing for the purchase and exportation by 
the government of certain depreciated silver coinage. 
In 1871 it was proposed to go into committee on an 
address to the Queen for a change in the Union Act, 

^ Section 54. This provision is copied from a clause in the Act of 
1840. 

- Bourinot, p. 406. 

99 



THE CANADIAN BUDGETARY SYSTEM 

so as to assign the debt of old Canada to the Domin- 
ion entirely, and to compensate Nova Scotia and New 
Brunswick in connection therewith. The Speaker 
expressed an opinion adverse to the proposal on the 
ground that it was intended as preliminary to legis- 
lation imposing a public burden, and was, conse- 
quently, not a mere abstract resolution which did not 
necessarily involve a future grant. 

In further restraint of the right of initiation upon the 
part of private members with reference to financial 
measures is the standing order of the Canadian House 
which provides that: 

If any motion be made in the House for any public 
aid or charge upon the people, the consideration and 
debate thereof may not be presently entered upon, 
but shall be adjourned until such further day as the 
House shall think fit to appoint; and then it shall be 
referred to a committee of the whole House, before 
any resolution or vote of the House do pass thereon. 
This rule is strictly observed."" 

The following statement of Bourinot's perhaps deserves 
notice. He says : 

A practice has grown up in the House of allowing 
the introduction of resolutions by private members, 
when they do not directly involve the expenditure of 
public money, but simply express an abstract opinion 
on a matter which may necessitate a future grant. 
As this is a question not always understood, it may 
be explained that such resolutions, being framed in 
general terms, do not bind the House to future legis- 
lation on the subject, and are merely intended to point 
out to the government the importance and necessity 

^ Bourinot, p. 408. This rule Bourinot observes is substantially 
similar to the English rule. The English rule, however, is more definite 
in that it adds the words, "or charge upon the public revenue, whether 
payable out of the consolidated fund or out of moneys to be provided by 
Parliament." 

100 



PARLIAMENTARY ACTION UPON ESTIMATES 

of such expenditure. Referring to this right of mem- 
bers to move such abstract resolutions all authorities 
agree that it is one ''which the House exercises and 
should always exercise with great reserve, and only 
under peculiar and exceptional circumstances/' Such 
resolutions are considered virtually "an evasion of 
the rules of the House, and are on that account objec- 
tionable, and should be discouraged as much as pos- 
sible." Nevertheless, neither the English nor Canadian 
House of Commons has ever agreed to the adoption 
of a rule to fetter their discretion in regard to the 
entertaining of such propositions.^ 

Senate Amendments. The spirit of this rule would 
prevent amendments in the Senate of bills sent to it by 
the House, where the effect is to make new or increased 
demands upon the public purse. However, upon occa- 
sions, in order not to prevent, late in the session, the en- 
actment of useful measures, the House has accepted 
Senate amendments which only incidentally necessitate 
a charge upon the people. Furthermore, with reference 
specifically to measures imposing pecuniary penalties the 
House has a rule which reads as follows : 

The House will not insist on the principle claimed 
and exercised by them of laying aside bills sent from 
the Senate because they impose pecuniary penalties; 
nor of laying aside amendments made by the Senate 
because they introduce into or alter pecuniary penal- 
ties in bills sent to them by this House, provided that 
all such penalties thereby imposed are only to punish 
or prevent crimes and offences, and do not tend to 
lay a burden on the subject, either as aid or supply 
to Her Majesty, or for any general or special purpose 
by votes, tolls, assessments, or otherwise. 

1 Bourinot, p. 411. 

lOI 



THE CANADIAN BUDGETARY SYSTEM 

It is still further to be observed that, as a matter of 
convenience, bills v^ath regard to matters which, if 
executed, v^ill require the expenditure of pubHc money 
are not infrequently introduced in the Senate and have 
indeed money clauses in them w^hen introduced. These 
clauses are, however, left out when the bills are sent to 
committee, and when they are passed, engrossed and 
sent to the Commons, the provisions providing for ex- 
penditures are printed in red ink and, by a fiction, are 
considered as not there at all/ 

Committees of Supply and of Ways and Means. 

Generally speaking, the parliamentary procedure for 
granting supplies to the government is similar to that 
followed in the English Parliament. The standing 
orders provide that immediately after the speech from 
the throne opening the session, and the reply thereto, 
committees of supply and of ways and means shall be 
constituted. Before going into Committee of Supply, 
however, the House expects to receive from the Govern- 
ment the Estimates for the coming fiscal year, and these 
Estimates, together with the message of transmissal of 
the Governor General, are referred to the Committee of 
Supply. 

As provided in the standing order already quoted, all 
revenue appropriation bills must be considered in these 
committees. This rule applies not only to all motions in- 
volving direct expenditures, but also to any measures 
which release or diminish the amount of sums due to the 
state. 

The Committees of Supply and of Ways and Means 
are committees of the whole House. The advantages 

1 Bourinot, p. 493. 

102 



PARLIAMENTARY ACTION UPON ESTIMATES 

obtained from the formal change in the constitution of 
the House are very slight. The Speaker is replaced by 
a chairman — the chairman of committees, or a deputy 
appointed by the Speaker — and the right of members to 
speak more than once on the same question is granted. 
The previous question is not in order in committee. 
The quorum is the same as of the House itself, namely, 
twenty members. 

Debate. The old English principle that the redress 
of grievances should precede the grant of supplies to the 
Crown is followed in Canada and, consequently, when 
the motion is made that the House go into committee "to 
consider of the supply to be granted to His Majesty,*' it 
is in order for any kind of amendment to be offered 
whether it relates to supply or not. 

* * * but there are certain limitations to this right. 
Only one amendment can be moved to the question, 
"that Mr. Speaker do now leave the chair." If that 
amendment is negatived, a discussion on other ques- 
tions may be raised but no other motion can be pro- 
posed. If the amendment is withdrawn, however, 
another amendment can be at once submitted to the 
house. The ordinary rules of debate are applicable 
on this occasion; for instance, a matter already 
decided by the House, or of which notice has been 
given, or which stands upon the orders of the day, 
cannot be discussed; nor can any subject or matter 
of detail which should be discussed in committee, be 
debated on these occasions; nor can debate or amend- 
ment be permitted relating to grants already agreed 
to, or to resolutions which will be proposed in the 
committee, or in the committee of ways and means, 
or to items in the estimates. It is not the practice 
in the Canadian Commons to give notice of any 
amendments to be proposed at this stage, though it 

103 



THE CANADIAN BUDGETARY SYSTEM 

is sometimes done. In the British Commons, notice 
is always given of amendments to be proposed to the 
motion for going into committee of supply. Mem- 
bers may, however, discuss various questions on the 
motion for the speaker to leave the chair, without 
moving any amendment thereto — a great latitude 
being allowed on such occasions. The adjournment 
of the House is in order at this stage, and it is also 
allowable to move an address to the sovereign or to 
the governor-general. 

When an amendment has been moved to the ques- 
tion for the speaker to leave the chair, discussion 
should be properly confined to its subject-matter. 
When an amendment is negatived, a debate may be 
raised when the speaker again puts the question, on 
the general policy of the government, or on some 
other subject, not embraced within the exceptions 
just mentioned/ 

A similar freedom of amendment and debate is per- 
mitted upon the motion to go into committee of ways and 
means. ^ 

Procedure in Committee of Supply. The Canadian 
procedure is to have all appropriations first voted in 
the Committee of Supply in the shape of resolutions. 
The Estimates laid before the House are divided into 
several hundred subdivisions or votes appertaining to the 
various public services and arranged in alphabetical 
order. A separate resolution must be passed in the 

1 Bourinot, p. 420. 

2 "The House is not necessarily called upon to go into committee of 
ways and means with any frequency, as its action is only imperative to 
vote duties of customs and excise or order payments out of consolidated 
funds to meet votes of supply; but whenever the motion is made for the 
Speaker to leave the chair to go into ways and means, members may 
address the House on any subject of public importance or move amend- 
ments under the same rules as govern on going into committee of supply/* 
Bourinot, p. 423. 

104 



PARLIAMENTARY ACTION UPON ESTIMATES 

committee for each vote, which resolution is proposed 
in each instance by the chairman. 

In order that members may properly equip themselves 
for the ensuing discussion, they are supplied w^ith a 
printed copy of the Estimates and also with the Auditor 
General's detailed report of government expenditures 
for the fiscal year just passed. It is customary to fur- 
nish this report before the Committee of Supply meets.^ 
Its scope and character w^ll be more specifically discussed 
in the chapter which deals with the audit of public ac- 
counts. 

Debate on the resolutions proposed in the Committee 
of Supply is unlimited and members are allowed to speak 
as often as they please. No increase in the grant con- 
tained in the resolution can be moved however. If the 
members of the committee are convinced of the ad- 
visability of increasing the appropriation recommended, 
they are confined to communicating their wishes to the 
government. Should the Ministry acquiesce in the sug- 
gestion made, another message is brought down from 
the Governor General at their instance recommending 
an additional grant beyond the amount originally speci- 
fied in the Estimates. On the other hand, if the Com- 
mittee of Supply is dissatisfied with the contents of a 
resolution, the only amendment which it can adopt is 
one reducing the amount of the appropriation. When 
such amendment is under discussion, members can show 
the impropriety of the government's estimate. It is not 

1 "I do not recall that we were ever asked to go into Supply before 
the report of the Auditor General was in our hands." Mr. McMullen- 
Can. Hansard, 1896, ist Sess., p. 771. 

"It is contrary to all custom and all rule that we should proceed to 
consider the estimates without having the Auditor General's report before 
us." Sir Richard Cartwright — Ibid. p. 766. 

105 



THE CANADIAN BUDGETARY SYSTEM 

within the power of the House to adopt another method 
of expenditure. 

Motions to reduce the amount of an appropriation are 
seldom made. 

I happen to have in my hand a list of the items of 
expenditure which the Liberal opposition moved 
against during the whole period of eighteen years 
during which the Conservative party were in office, 
and we will see what they were. In 1879 the present 
Minister of Trade and Commerce (Hon. Sir Richard 
Cartwright) proposed to make a reduction of $70,000 
in the expenditure for civil government. In 1880 no 
objection was taken. In 1881 they were silent; they 
did not move any resolution. In 1882 Mr. Mills pro- 
posed a reduction of $8,000 being payment for dam- 
ages to a steamer known as the U. C. Upper. In 
1883 ^o resolution was moved against the expendi- 
ture; in 1884 no resolution; in 1885, no resolution; 
in 1886, no resolution; in 1887, no resolution; in 1888, 
no resolution. In 1889 ^^e present Minister of Trade 
and Commerce moved that the vote for Manitoba 
penitentiaries be reduced by $10,526. ... In 1890 
no resolution was moved by honorable gentlemen 
opposite. Nor was any moved in 1891, 1892, 1893, 
1894, 1895, and 1896. . . . Mr. Speaker, during the 
whole period of eighteen years in which there was an 
expenditure of $603,000,000 in round numbers, these 
gentlemen only objected in the irregular way I have 
mentioned to $447,000 of it.^ 

Unless the government gives notice to the contrary, 
the Committee of Supply takes up the Estimates in 
regular order. 

When the estimates of a particular department are 
under consideration in the Committee of Supply, the 
established usage requires that the minister respon- 

1 Mr. James Clancy — Can. Hansard, 1902, p, 2341. 

106 



PARLIAMENTARY ACTION UPON ESTIMATES 

sible for the insertion of the various items should be on 
hand to defend and to explain them to the House. 
Where the department estimates, Hke those of the Public 
Works Department, comprise many individual items, 
concerning all of which the minister could hardly be ex- 
pected to be fully posted, a minor official is permitted to 
attend to supply any needed information. 

I have seen Sir Hector Langevin, when Minister of 
Public Works, stand for hours with his book in his hand 
and his deputy beside him, and give all information 
regarding the item in advance without waiting to be 
asked. If anything were neglected or forgotten in 
his memo, he would ask his deputy.^ 

Besides being resented, the absence of a minister upon 
such an occasion leads to the passing or reservation of 
items. 

I beg to call the attention of the leader of the Gov- 
ernment to the fact that it deprives the House of all 
the freedom it ought to have on concurrence to have 
the Minister absent.^ 

Mr. Foster — Who has charge of these items? 

Mr. Fielding — The Minister of Trade and Com- 
merce (Sir Richard Cartwright) has, but as he is not 
present just now if there is objection to any particular 
item, it can stand over.^ 

Sir Wilfrid Laurier — The opposition want certain 
information and they are entitled to it and must get 
it, and in the meantime we can reserve an item so 
that the question at issue may be fully discussed. 

Mr. Monk — I must confess that the system of pass- 
ing items and of reserving one is not a good one. It 
results in items being passed without full or proper 

1 Mr. Edwards — Can. Hansard, 1909-10, p. 703. 

2 Mr. Foster — Can. Hansard, 1896, 2nd Sess., p. 2546. 
^ Can. Hansard, 1896, 2nd Sess., p. 2021. 

107 



THE CANADIAN BUDGETARY SYSTEM 

discussion, and generally the reserved item comes up 
when everyone who wants information is absent.^ 

The task of arranging the details of the debates in the 
Committee of Supply is left to the party whips. Certain 
votes in the Estimates are selected for lengthy discus- 
sion and each party is given an opportunity of dwelling 
on items which are deemed to be of special importance. 
Sometimes members from the opposite sides of the House 
speak in rotation which adds much to the piquancy and 
value of the debates on the Estimates. After each of 
its sittings, the Committee of Supply formally reports 
progress to the Speaker of the House and obtains leave 
to sit again until it has finished the consideration of the 
estimates of expenditures. 

With regard, generally, to the consideration of the 
Estimates by the House it may be said that while in the 
early days of the session there is considerable debate, 
each item opening up a field for a discussion of the 
operations of the department concerned, in the later 
stages the attention of the House becomes less keen, and 
during the last weeks of the session immense sums 
are often voted with little or no discussion. This is, 
however, an experience which is met with in nearly 
all popular legislative chambers. 

Report Stage. As soon as the Committee of 
Supply has finished its labors and has passed resolutions 
covering all the estimates, the action of the committee 
is reported to the House and a further opportunity for 
debate furnished when the acceptance of its report is 
under consideration. At this stage of legislation, how- 
ever, each member of the House is allowed to speak 

^ Can. Hansard 1907-08, 4006, et se. 

108 



PARLIAMENTARY ACTION UPON ESTIMATES 

only once. When the report of the Committee of Sup- 
ply is finally disposed of, it is the duty of the Minister 
of Finance to move that the House go again into Com- 
mittee of the Whole, sitting this time as the Committee 
on Ways and Means for the purpose of considering 
resolutions appropriating certain sums out of the Con- 
solidated Revenue Fund ''towards making good the sup- 
ply granted to His Majesty." These resolutions of the 
Ways and Means Committee must contain the same 
sums which have been already voted in the Committee 
on Supply. Although largely duplicating the work of 
the last named committee, these resolutions must be 
formally passed in the Committee of Ways and Means, 
reported back to the House and agreed to, before a sup- 
ply bill founded on the same can be introduced in the 
Commons. By this procedure members are given an 
additional opportunity to pass upon the Government's 
recommendations. 

In order to permit of their proper consideration, these 
formal resolutions from the Supply and Ways and 
Means Committees are not supposed to be reported to 
the House on the same day in which they are agreed 
to in committee. When resolutions from the Ways and 
Means Committee are formally reported to the House, 
they stand as read for the first time and are never dis- 
cussed or debated at this stage. On the second reading, 
each resolution is read separately and the question put 
whether the committee's report be concurred in or not. 
Debate is then in order and amendments are allowed, 
for any supply resolution can be reduced after having 
been thus reported without the House having to trans- 
fer itself again into Committee of Ways and Means. 
It frequently happens that resolutions are withdrawn 

109 



THE CANADIAN BUDGETARY SYSTEM 

after their second reading or referred back to the com- 
mittee for the purpose of effecting some amendment. 
Only during very recent years has it been found ex- 
pedient to apply the closure to debates. 

Supply Bills. As soon as the House has concluded 
its consideration of the supply resolutions reported to it 
by the Ways and Means Committee, the Minister of 
Finance introduces the corresponding appropriation or 
supply bills. In these bills all the supply votes passed by 
Parliament are recited in detail. They differ from other 
bills in that their preambles assume the shape of an 
address to the British sovereign.^ The supply bill also 
directs that a detailed account of the sums expended 
under its authority shall be laid before Parliament dur- 
ing the first fifteen days of the ensuing session. 
Although a very unusual occurrence, it is entirely regu- 
lar'to inaugurate a debate or to propose amendments at 
the three several readings of a supply bill. Although 
introduced late in the session, all the items contained in 
these formal appropriation acts have, as has been shown, 
been previously before the Commons for discussion. 

As earlier brought out, the amount appropriated for 
the various government services in the supply bills of 
the Dominion is merely the gross total of all the items 
originally embodied in the Estimates and asked to be 
voted by Parliament. Payments such as salaries of 
permanent officials and interest on the public debt which 

1 The phraseology is as follows : "Most Gracious Sovereign, Whereas 
it appears by messages from His Excellency the Most Noble Victor 
Canistian William, Duke of Devonshire, etc., etc.. Governor General of 
Canada, and the estimates accompanying the said messages, that the sums 
hereinafter mentioned are required to defray certain expenses of the 
public service of Canada, not otherwise provided for . . . May it there- 
fore be enacted, and be it enacted by the King's Most Excellent Majesty, 
by and with the advice and consent of the Senate and House of Commons 
of Canada, that: — ..." 

110 



PARLIAMENTARY ACTION UPON ESTIMATES 

do not have to be voted annually are outside the pur- 
view of the supply bills. Whenever it is desired to 
effect a change in these payments authorized to be made 
by law and not by the supply bill itself, a resolution is 
introduced by one of the Cabinet that the House re- 
solve itself into a committee of the whole to consider the 
proposed amendment to the existing statute. At the 
same time the Minister informs the House that the 
Governor General is both acquainted with the subject 
matter of the resolution and recommends it to the 
House. After the amending resolution has been favor- 
ably acted upon in committee, reported back to and ac- 
cepted by the House on second reading, the Minister is 
then given leave to introduce a bill embodying the pro- 
posed change in the permanent grant previously made. 
This bill is passed then in the ordinary way. 

Adequacy of Consideration of the Estimates by 
Parliament. It appears that the consideration by the 
Parliament of the Estimates submitted to it by the 
Executive is by no means adequate. This is partly due 
to difficulties inherent in the task, partly to the circum- 
stances that the Estimates are not always offered in a 
sufficiently detailed form, and partly to the fact that the 
House of Commons has not itself seen fit to establish 
within itself a special committee or other agency whose 
special function it is to study and criticize the execu- 
tive expenditure propositions and thus bring the 
contestable points before the whole House in such a 
form that they may be understood and intelligently 
passed upon. The difficulties inherent in an adequate 
scrutiny of public estimates by a large legislative body 
arise out of the number of items that have to be ex- 

III 



THE CANADIAN BUDGETARY SYSTEM 

amined and the fact that their propriety must in large 
measure depend upon considerations which can be fully 
known and understood only by those who have the spend- 
ing of them. These inherent difficulties, however, in- 
stead of justifying a feeling of incompetency upon the 
part of the legislature and a disposition to shirk its 
duties as custodian of the interests of the people, should, 
upon the contrary, excite it to every possible effort to 
adopt means whereby its control of the public purpose 
may be exercised as effectively as is practically possible. 
Increase of Expenditures. At the present time, 
the annual ordinary expenditures of the Dominion gov- 
ernment are over ten times what they were in the first 
year after confederation. This growth in the volume 
of expenditure is making it more difficult from year to 
year for the Dominion Parliament adequately to con- 
sider and discuss the government estimates. 

We must recollect that conditions are very different 
from what they were. When we were a small coun- 
try with a small revenue and a small expenditure, 
each minister himself had a greater check on the work 
of his department than he has today. The govern- 
ment had a greater check and so had parliament, but 
when these operations are multiplied a hundred fold, 
my view is that these checks are absolutely inade- 
quate, and that something more ought to be supplied. 
What check have the ministers over an expenditure 
of some $100,000,000, extending all over this country, 
and on most diversified subjects? Under present 
conditions, they are almost entirely at the mercy of 
others. They cannot give this expenditure the per- 
sonal supervision which they could an expenditure 
of a fairly moderate amount; either in its planning or 
its carrying out. That applies to the different great 
departments of this government and to the minister 

112 



PARLIAMENTARY ACTION UPON ESTIMATES 

of each of these departments. With the outside work 
he has to do, with the cabinet work which takes up 
his time, no minister can have that check which ought 
to be had over the administration of his own depart- 
ment in the way of expenditure. But you will say 
the cabinet checks the minister. That used to be the 
case when we had a smaller expenditure, and when 
practically every item came before the cabinet and 
was explained, and passed upon by the cabinet. But 
today that would be absolutely impossible. It is not 
attempted to be done except in some very special 
instances, and the result is that the supervision and 
check of the cabinet over department expenditure has 
largely passed away. . . . But you may say that 
ultimately the House of Commons will be a check. 
Yes, it used to be, but it is not any longer to any 
considerable extent. When I first came to this House, 
the items in supply were criticised by men on the 
government benches as well as in the opposition. But 
today, once the estimates are on the table, tell me, 
have you ever seen a government member attempt 
anything at all in the way of criticism of any of these 
estimates? The minister who is putting through his 
estimates is left alone by his followers, and has the 
whole business to attend to by himself. And on the 
opposition side, whatever may be our energy and dis- 
position to work, it is impossible under present condi- 
tions, when $1 15,000,000 of estimates are turned loose 
on the House, without any information in the esti- 
mates themselves, it is absolutely impossible for the 
opposition to exercise any effective check. All they 
can do is to wheedle out from the minister in charge, 
who is anxious to give no more information than he 
is absolutely obliged to give, what details they can.^ 

On account of the rapid growth in Canada's popula- 
tion, a more or less steady increase in government ex- 

1 Mr. Foster — Can. Hansard, 1910-11, p. 6603. 

"3 



THE CANADIAN BUDGETARY SYSTEM 

penditure must be counted upon hereafter. This will 
further augment the difficulties already experienced in 
the Dominion House of Commons in intelligently dis- 
cussing and controlling the budgetary Estimates. In- 
deed, as things now are, items of comparatively small 
importance will be often debated at length, while large 
appropriations are rushed through the House without 
any proper consideration. 

1 have known an item of $40,000 in this House to 
take up a whole sitting and items aggregating 
$10,000,000 to be passed in ten minutes without 
proper consideration.^ 

In England, a similar trouble has been encountered. 

During my experience of the last Parhament, I 
observed that every year in round figures, we voted 
something like £50,000,000 of public money without 
any discussion whatever. ... In practice it has been 
found that those responsible for the estimates have 
not been loth to allow the House to fritter away most 
of the allotted time in discussing trivialities, while 
many millions are voted in as many minutes towards 
the end of the session without the slig*htest pretence 
of examination or debate.^ 

wSeveral suggestions have been made for attaining a 
more effective control over the Estimates. The follow- 
ing is one of these suggestions : 

Four-fifths of the time of this House is taken up 
in the discussion of the Estimates. I submit that 
without changing the rules of this House, in so far 
as they affect the result, we could reduce the length 
of the session by at least six weeks by a very slight 
change in our procedure. If the minister of any 

^ Mr. Lewis — Can. Hansard, 1910-11, p. 420. 

2 Mr. Bottomley — Hansard's Debates (N. S.) Vol. 12, p. 213-14 
(Nov. 5, 1909.) 

114 



PARLIAMENTARY ACTION UPON ESTIMATES 

department will give notice that two weeks from a 
certain day he will be in Room 62, or whatever com- 
mittee room it may be, with his estimates at a certain 
hour, say 10 A. M., and let any honorable member 
in this House be allowed to go there and investigate 
the various items, it will be possible to pass all non- 
contentious items en bloc. It would not affect the 
contentious items being brought up in this Plouse. 
. . . If they (the Government) would simply have 
the estimates carefully examined by this mode and 
all non-contentious items passed en bloc, a great im- 
provement in the procedure would be eft'ected. The 
opposition could appoint a committee to attend, but 
any member of the House would be at liberty to ask 
any questions with regard to any item that he desired. 
Hours and hours of useful time of this country would 
be saved as well as thousands of dollars/ 

In effect, examination of non-contentious items in 
advance of their consideration by the House of Com- 
mons is here proposed. The appointment of a regular 
standing committee of the House to go over all the esti- 
mates for the coming fiscal year, in advance of their sub- 
mission to Parliament, has also been advocated. 

Your commission would suggest that from the 
House of Commons a small committee be created to 
be called the ''Estimates Committee" to whom the 
estimates might be referred for examination before 
being passed upon by the House and that such com- 
mittee should have power to call for persons and 
papers if considered desirable; the committee to 
ascertain full particulars of the several votes asked 
for and any explanations that may be desired. This 
procedure would in all probability relieve the House 

1 Mr. Lewis — Can. Hansard, 1910-11, p. 420. 

IK 



THE CANADIAN BUDGETARY SYSTEM 

from the delays now occurring in committee of supply 
and would tend to shorten the session/ 

A committee of fifteen members, like the one just pro- 
posed, has existed in the English House of Commons 
during the last few years to examine the estimates for 
the current fiscal year. Instead of reviewing all the 
estimates, however, this new committee only examines 
certain sections of them at each parliamentary session 
for the purpose of detecting, if possible, extravagant, 
reduplicated or obsolete items of expenditure. To have 
all of Great Britain's Estimates scrutinized in this 
fashion, the proposal is advanced that no less than four 
such estimates committees should be appointed,^ 

Votes on Account. In order that the appropria- 
tions may correspond as nearly as possible to the fiscal 
needs of the year to which they are applicable, it is de- 
sirable that as short a time as possible should intervene 
between the time they are passed and the time when 
their expenditure is called for. In the United States it 
has been felt necessary that as nearly as possible all the 
appropriations for a fiscal year should be made before 
the beginning of the year. In England and in France, 
however, this has not been deemed imperative. In both 
countries the final appropriations are not made until well 
into the year to which they apply. Before they become 
available the current needs of the government are met 
in England by the passing of what are called 'Votes on 
account". In France the same result is reached by what 
are termed douziemes provisoires. These latter have 
been defined as ''an authorization to collect taxes and 

1 Report of Royal Commission on the Civil Service, Sessional 
Papers, 1907-08, Vol. XLII No. 29a, p. 24, 

2 See London Economist of October 28, 1916. 

116 



PARLIAMENTARY ACTION UPON ESTIMATES 

pay public expenditures over a certain number of 
months, in accordance with a temporary allotment." 
It is, however, to be said with reference to the French 
practice that the douziemes provisoires are employed not 
so much from a deliberate desire to synchronize as 
nearly as possible the voting and expenditure of public 
moneys, as to escape from a situation brought about by 
the Chambers failing to act as promptly as, in principle, 
it is deemed they should act. Thus, says Stourm: 
''When the fiscal year is about to open, and the Cham- 
bers lack time to reach a vote on the whole fiscal law 
prior to December 31 [the fiscal year in France begins 
January i ] , a partial budget hastily prepared, covering 
a few months and calculated grosso modo, is voted. 
The doiiziemes provisoires are, therefore, designed to 
legalize an abnormal situation."^ Though thus stigma- 
tized as abnormal, the incidentally beneficent result is to 
shorten the period between the time of making the ap- 
propriations and their expenditure. And thus Stourm 
is led to say: 'Tt is doubtful whether in themselves the 
doumemes provisoires really deserve such absolute con- 
demnation. Are they not condemned, in the first place, 
because they are introduced irregularly and hastily, 
without due consideration ? Let them became a regular 
institution and perhaps we shall be able to appreciate 
them."^ 

In Canada a system is employed which is not exactly 
the same but approximates to that of Great Britain. In 
Great Britain the votes on account take the form of lump 
sum appropriations, the expenditure of which is re- 
stricted to services already authorized. In Canada the 

^ The Budget, by Rene Stourm; A Translation (Studies in Ad- 
ministration, Institute for Government Research, 1917), p. 326. 
' The Budget, p. 330. 

117 



THE CANADIAN BUDGETARY SYSTEM 

plan is followed of appropriating fractional amounts of 
all the items contained in the Estimates. Thus, for ex- 
ample, on February 6, 191 7, the House of Commons, in 
Appropriation Act No. i, provided that one-fourth of the 
several items appearing in Schedule A of the act should 
be made available. In Schedule B were enumerated 
items which were appropriated in their entirety.^ In a 
second appropriation measure passed by the Commons 
on July 6, 19 17, the remaining three-fourths of most of 
the items in the Schedule A of the earlier act were ap- 
propriated, and one-sixth of the amounts enumerated 
in a second schedule. On September 3 and September 
19, further acts were passed completing the appropria- 
tions for the year. It thus appears that nearly one-half 
of the fiscal year had expired before the final appropria- 
tions were made. 

Revenue Measures. As in the case of the Esti- 
mates, the approval of the Governor General must first 
be obtained before any change in the existing tax laws 
can be brought to the attention of the House. 

When any impost or tax is to be put on the people, 
the first step to be taken by the government is to 
announce to the House that they have the consent 
of His Excellency to the introduction of a measure. 
That is a safeguard which, according to all constitu- 
tional authorities, is of vast interest to the people." 

In regard to the consideration and passage of revenue 
laws, the Canadian practice is to have all changes in the 
existing tax laws or propositions for the imposition of 
new forms of taxation first considered in the Committee 

^ The items in Schedule B were based upon the Supplementary 
Estimates for the year 1916-1917. 

- Mr. Lennox — Can, Hansard, 1904, p. 1826. 

118 



PARLIAMENTARY ACTION UPON ESTIMATES 

of Ways and Means. This is done by the Minister of 
Finance giving notice that, when the House goes into 
Committee of Ways and Means, he will move the pas- 
sage of certain resolutions providing for changes in the 
existing tax laws. Generally these resolutions deal 
with a revision of the custom duties and excise charges 
from which the Dominion derives the greater part of its 
revenues. 

Logically, it might seem that the House should not 
take up the question of changes in the revenue laws until 
the expenditures to be met had been decided in Com- 
mittee of Supply. In fact, however, especially with 
reference to the tariff, it is held proper for the Finance 
Minister to move that the House go into Committee of 
Ways and Means without waiting for action by the 
Committee of Supply. 

Budget Speech. The budget speech^ is usually 
made upon the motion to go into Committee of Ways 
and Means. Upon some occasions, however, it has 
been delivered upon the motion to go into Committee of 
Supply. In this speech the Minister of Finance analyzes 
the receipts and expenditures for the past and estimates 
those of the coming year, discusses the immediate 
financial outlook and discloses to the House any new 
scheme of taxation which the Government intends to 
put into effect. The Canadian budget speeches are 
often delivered with the object of creating party capital. 

It has been the custom of those delivering the 
Budget speech in the past to go back to a number of 

^ This speech is generally termed the "Budget". This, however, is 
a loose use of the word for, as has been earlier pointed out, the 
Budget properly speaking, is the document containing balanced finan- 
cial statements, recommended expenditures and proposed revenue 
measures with estimates of their probable yield For a typical budget 
speech, see Appendix 4. 

119 



THE CANADIAN BUDGETARY SYSTEM 

years and make comparisons, and they were always 
odious comparisons between what the then govern- 
ment did and what past governments had or had not 
done/ 

Formerly the rule in the Dominion House was that 
the Estimates could not be taken up until after the 
budget speech had been delivered. If Parliament was 
to dispatch its business quickly therefore, it was essen- 
tial to have the budget speech delivered early in the 
session. 

By our former practice the estimates were not dis- 
cussed until after the budget speech had been deliv- 
ered, and if that was delayed a late period was reached 
before the House was able to undertake the discussion 
and consideration of the estimates.^ 

Nowadays, since the Estimates can be discussed at 
any period of the session, the time when the budget 
speech is delivered is not of such vital importance. 

It will be remembered by the House that three 
years ago a change was made in our practice and the 
British method was introduced; that is to say, the 
estimates are brought down at an early period of the 
session so that they can be considered from time to 
time as available occasions arise. And when this is 
done and the estimates are before the House and 
ready for consideration, it is not of such pressing 
importance that the budget speech should be deliv- 
ered at an early date.^ 

Nevertheless as the most important debates of the ses- 
sion usually occur after the delivery of the budget 

^ Hon. Mr. Peters, Prince Edward Island Assembly Debates, 1891, 
p. 205. 

2 Mr. Foster — Can. Hansard, 1890, p. 1944. 

3 Mr. Foster — Ibid. 

120 



PARLIAMENTARY ACTION UPON ESTIMATES 

speech, it is desirable to have it made as early as is prac- 
ticable. 

The only case in which I should excuse delay in 
bringing down the budget would be when no changes, 
or only insignificant changes are to be made. In such 
a case, the particular time for bringing down the 
budget is a matter of comparatively small moment; 
but whenever important changes are to be made seri- 
ously affecting the trade and commerce of the coun- 
try, then it is the duty of the government to bring 
down the budget at a particularly early period, so 
that full and ample time may be afforded for their 
discussion." 

Powers of Private Members. As in the case of 
requests for appropriations, it is the established principle, 
strictly adhered to, that all proposals for changes in 
revenue laws should come from the Ministry. How- 
ever, ''all the authorities go to show that, when the gov- 
ernment has formally submitted to the House the ques- 
tion for the revision of customs and excise duties, it is 
competent for a member 'to propose in committee to sub- 
stitute another tax of equivalent amount for that pro- 
posed by ministers, the necessity of the new taxation to 
a given extent being declared on behalf of the Crown.* 
It is also competent for any member to propose another 
scheme of taxation for the same purpose, as a sub- 
stitute for the government plan. But it is not in order 
to propose a new and distinct tax, which is not a mere 
increase or diminution of a duty upon an article already 
recommended by the government for taxation, though 
it is the function of this committee to impose rather than 
to repeal taxes. A proposition for the repeal of a duty 

1 Sir Richard Cartwright — Can. Hansard, 1890, p. 1950. 

121 



THE CANADIAN BUDGETARY SYSTEM 

is in order, and cases will be found where a proposed 
duty has been struck out in committee.'" 

Reports of the Committee. Having been read a 
first and second time and approved, resolutions of the 
committee are reported to the House. They are then 
read a first time, which is a purely formal procedure, 
without discussion or amendments offered. Upon the 
question of the second reading there is opportunity for 
a general debate. Remarks must be relevant to the 
matter at issue. The supplies voted in committee may 
be reduced but not increased. If increases are desired, 
there must be recommendations from the Crown which 
of course must go through the committee stage. This 
means that every new duty must be thus considered. 
''So strictly is the rule enforced which requires every 
new duty to be voted in comm^ittee, that even where the 
object of a bill is to reduce duties, and the aggregate 
amount of duties will, in fact, be reduced, yet if any new 
duty, however small, be imposed or any existing duty be 
increased in the proposed scale of duties, such new or 
increased duty must be voted in committee, either be- 
fore or after the introduction of the bill." " 

As in Ejngland the practice is to put resolutions of the 
Committee of Ways and Means, changing excise and 
customs duties, immediately into force, that is, before 
they receive definite statutory form. In case a resolu- 
tion fails to secure enactment, the taxes thus levied are 

^ Bourinot, Parliamentary Procedure, p. 431. These principles 
have been taken over in Canada from English practices. Bourinot 
shows, also, that, though deemed objectionable, private members may 
propose resolutions expressing an abstract opinion on the expediency 
or inexpediency of imposing a tax. And, both in England and Canada, 
there have been appointed committees, in opposition to the wishes of 
the ministry, to consider, abstractly, questions of taxation. 

2 Bourinot, p. 438. 

122 



PARLIAMENTARY ACTION UPON ESTIMATES 

refunded, and the government which has assumed the 
responsibility obtains from Parliament an act of in- 
demnity. Ordinarily, however, the chances of the 
House refusing to adopt the resolutions of its Com- 
mittee are very slight. 

Supply Bills in the Senate. As has been earlier 
indicated, the Senate does not attempt to oppose its will 
to that of the House with regard to matters of finance. 
The general questions of policy involved in the supply 
bills are usuallv discussed with considerable fulness, but 
the measures do not go to the Committee of the Whole, 
and the bill itself not unusually goes through all its 
formal legislative stages in a single day. No attempt 
is ever made in the Senate to amend a supply bill. 
Theoretically, the Senate may reject the bill, but it is not 
likely that the right will ever be exercised. When 
passed the bill is returned to the Commons to be sub- 
mitted by it to the Governor General for his assent. 
This assent is given in the following terms : 

In His Majesty's name, his Excellency, the Gov- 
ernor-General, thanks his loyal subjects, accepts their 
benevolence, and assents to this bill. 

Addresses to the Crown. Bourinot points out that, 
in conformity with English precedent, when, because of 
the lateness of the session or other reason, it is not prac- 
ticable to miake certain grants for specific expenditures, 
definite in amount, the House will agree upon an Ad- 
dress to the Crown authorizing the expenditure with the 
promise that the House will later vote the necessary 
supplies. Both in England and Canada such addresses 
may be moved by private members. This is permitted 
because the provision ''that the House will make good 

123 



THE CANADIAN BUDGETARY SYSTEM 

the same/' necessitates that the suppHes when granted 
will have gone through the regular legislative procedure 
which includes initial recommendation by the Ministry. 

Votes of Credit. As in England, so in Canada, in 
order to meet emergencies, the House, upon occasions, 
votes what are known as credits, which place round 
sums at the disposal of the Executive, such parts of 
these sums to be expended as may be found necessary. 
Thus, upon the outbreak of the great war in August, 
1914, a credit of $50,000,000 was at once voted. 

Private Bill Legislation. Of extreme importance 
in any system of national finance is the procedure 
adopted for the consideration and authorization of 
projects involving public expenditures which are for the 
benefi.t of special localities. These measures, as is well 
known, furnish in France and the United States abun- 
dant opportunity for ''log-rolling'' among the members 
of the legislature and for what has come to be known 
as ''pork-barrel" legislation. In England, for reasons 
which will be later discussed, this evil has been almost 
entirely avoided. It may be here said, however, that 
these reasons depend in part upon the peculiar relation- 
ship in which members of Parliament stand towards 
their respective constituencies and partly upon the 
admirable procedure which the Parliament has adopted 
for the consideration of what are known as 'Trivate 
Bills." 

In Canada a private bill procedure has been adopted 
which is modeled upon that of the mother country, but 
which, in its operation at least, does not work so 
efficiently as does the English system with regard to the 
prevention of extravagant and unnecessary expenditures 

124 



PARLIAMENTARY ACTION UPON ESTIMATES 

for the special benefit of particular localities. Thus the 
Canadian procedure provides that all private bills shall 
be based upon petitions stating the purposes aimed at; 
and that they shall be referred, after the second reading, 
to large standing committees to which are entrusted the 
essentially judicial function of taking evidence, hearing 
arguments, and rendering judgments as to the merits 
of the proposals submitted to them. All persons whose 
interests can be in any way affected by the projects pro- 
posed must receive notice and be granted the oppor- 
tunity to appear and present their evidence or argu- 
ments as to whether the bills should be passed. The un- 
fortunate practice is, however, permitted of allowing 
members of the Parliament to take charge of private 
bills for the purpose of obtaining their favorable con- 
sideration in the House and in committee. This is 
directly counter to the English usage which deems it 
highly improper that a member should in any way, 
directly or indirectly, engage in the promotion of any 
measure of a private character. In England, also, 
private bills are sent to small committees and it would 
seem likely that by this means a more nearly judicial 
consideration by them is secured than is obtained at the 
hands of the larger Canadian committees. Another 
divergence from the English practice, which is prob- 
ably unfortunate, is the Canadian practice which, though 
denying to ministers the right to initiate or promote 
private bill legislation, permits them to sit on private 
bill committees in the Commons. 

It may also be added that at times bills essentially 
private in character are received and treated as public 
bills and thus the requirements of private bill procedure 
avoided. 

125 



THE CANADIAN BUDGETARY SYSTEM 

It might seem from a reading of the sections of the 
British North America Act, which enumerate the ex- 
clusive legislative powers of the Provinces and of the 
Dominion, that no great opportunity is given for the 
enactment by the Dominion of local or private bills. 
In fact, however, there has been given a liberal con- 
struction to the authority of the Dominion Parliament 
to "m'ake lavv^s for the peace, order, and good govern- 
ment of Canada in relation to all matters not coming 
within the classes of subjects of this act assigned ex- 
clusively to the legislatures of the Provinces." Then 
too, as in the United States, the authority of the 
Dominion government to regulate foreign and inter- 
provincial commerce has furnished constitutional war- 
rant for the exercise of extensive national powers. The 
specific legislative powers granted to the Dominion by 
the Adt of 1867, especially those relating to trade and 
commerce, banking, etc., have also permitted the 
authorization of many public works to be constructed 
at Dominion expense, and made possible the granting of 
Dominion articles of incorporation to banking and other 
companies. 

Role of the Opposition in Canadian Budget Prac- 
tice. It is a truism which needs but Httle elaboration 
that the existence of an effective opposition is an essen- 
tial factor to the successful working of any system of 
party government. 

This need has been fully appreciated, if not realized 
in practice, in Canada. 

Under our system of government an opposition is 
a necessity. Under our system a party is necessary, 
and that an opposition is as necessary as a govern- 
ment is a proposition which no one who is acquainted 

126 



PARLIAMENTARY ACTION UPON ESTIMATES 

with the history of parUamentary government will 
deny. With all the evils which attend parliamentary 
government, it has been acknowledged by one of the 
greatest writers on that subject that an opposition 
is a necessity. Let me read, what was said by Sir 
Thomas Erskine May as to the rights and duties of 
an opposition. After speaking of the evils that neces- 
sarily spring from party government, and deploring 
those evils, he goes on to speak of the opposition: 

"But, on the other hand, we find that government, 
without party is absolutism; that rulers, without 
opposition, may be despots. We acknowledge, with 
gratitude, that we owe to party most of our rights 
and liberties. . . . We perceive that an opposition 
may often serve the country far better than a min- 
istry, and that, where its principles are right, they 
will prevail. By argument and discussion truth is 
discovered, public opinion is expressed, and a free 
people are trained to self government. We feel that 
party is essential to representative institutions. 
Every interest, principle, opinion, theory and senti- 
ment finds expression. The majority governs, but 
the minority is never without sympathy, representa- 
tion and hope."^ 

There are important functions to be performed not 
only by those who are entrusted with the public 
confidence, or with the royal confidence for the time 
being, but also by those who represent in the Legis- 
lature, Her Majesty's Opposition. Perhaps one of 
the most important functions that an Opposition per- 
forms is the careful criticism and amendment of those 
measures which are from time to time submitted to 
us by the Government. The Opposition, also, where 
the principles of parliamentary government are fairly 
carried out, are enabled to exercise a wholesome 
check and control over the exercise of patronage and 

^ Mr. Flynn — Can. Hansard, 1890, p. 1872. 

127 



THE CANADIAN BUDGETARY SYSTEM 

the expenditure of public moneys. In fact, the Gov- 
ernment is again and again importuned by its friends 
to make expenditures and appointments which can 
scarcely be justified on the ground of public necessity; 
and the vigilant exercise of supervision by an Oppo- 
sition, where fair play is given to the discharge of its 
functions enables it to strengthen the hands of the 
Government in resisting pretensions that are not 
capable of justification on the grounds of public 
policy or public necessity/ 

The present Premier of Canada once said that ^'a 
Government's strength was to be measured by its power 
of resistance to the demands for expenditure by camp 
followers and partisans." The chances of its refusing 
appropriations for improper objects are greatly im- 
proved, however, whenever the opposition party is well 
represented in the legislature. 

As a means of making the opposition more effective, 
the Dominion Parliament on July 17th, 1905, enacted 
a statute ^ granting "to the member occupying the recog- 
nized position of Leader of the Opposition in the House 
of Commons" the same salary as allowed a Cabinet 
Minister. In the course of the debate on this unique 
piece of legislation, it was said : 

I notice that it is stated in some quarters that it is 
both novel and illogical for Parliament to pay any 
remuneration above the sessional indemnity to the 
recognized leader of the opposition. . . . Under the 
constitution of the mother country, under the law 
and the constitution, there is no such office recog-' 
nized as Prime Minister, no such office recognized 
as leader of the opposition, but under the usages of 
our constitutional system the Prime Minister and the 

^ Mr. Mills— Can. Hansard, 1890, p. i860. 
24-5 Edward VII, Chap. 43, Sec. 2. 

128 



PARLIAMENTARY ACTION UPON ESTIMATES 

leader of the opposition are important factors in the 
pubHc life of the country. In Canada the existence 
of a Prime Minister is recognized by our statutes, 
because you lind under the revised statutes that the 
First Minister is to get $i,ooo (now $5,000) more 
than the other members of the cabinet. I find also 
that we recognize the existence of the leader of the 
opposition under our constitutional system in Canada 
by the fact that we appropriate in this parliament 
every year a certain amount of public funds for 
clerical services for the leader of the opposition. 
Therefore, there is in that case a recognition not only 
of the Prime Minister, as such, in Canada, but also 
of the existence of the leader of the opposition, and 
in Ontario in the estimates of 1905, it is expressly 
stated that a certain amount of money shall be given 
every year for : Clerks of committees, secretary to the 
Speaker, and leader of the opposition for salaries 
$5,000. 

That is a distinct recognition of the position of 
leader of the opposition in the great province of 
Ontario. Then in that province also by referring to 
the Revised Statutes of Ontario, Vol. I, Chapter 8, 
sections 40 and 41, it will be seen that in the case of 
elections there are circumstances in which the certifi- 
cate^ must be signed by the leader of the opposition 
in Ontario.^ 

In giving this day an indemnity to the recognized 
person who occupies the position of leader of the 
opposition, I do not admit that we are making a 
departure from our system of constitutional govern- 
ment; I contend that we are simply coming to a new 
stage in the development of constitutional govern- 
ment. It is a strange fact, but it is a fact which is 
known to everybody that the very basis of our system 

^ Waiving requirement for new registration of voters in cases of 
by-elections. 

2 Mr. Stockton — Can. Hansard, 1905, p. 9728. 

I2Q 



THE CANADIAN BUDGETARY SYSTEM 

of constitutional government is that the cabinet has 
no recognized position under the law. The system 
has been gradually evolved in the course of ages by 
the nation which has been the head and front and 
mother of all constitutional parliaments everywhere. 
But in Great Britain it so happens that the men who 
are engaged in the task of legislating for the nation 
all belong to a class which we have not in this coun- 
try; that is to say they are men of leisure or of means; 
we are all bound to work for the bread of every day 
and w^e must recognize this and are simply recog- 
nizing it. The leader of the opposition under our 
system is just as much a part of the constitutional 
system of government as the Prime Minister himself. 
We acknowledge that it is better for the country, 
that it is indeed essential for the country that the 
shades of opinion which are represented on both sides 
of this House should be placed as far as possible on 
a footing of equality and that we should have a strong 
opposition to voice the views of those who do not 
think with the majority, and moreover that we should 
have that legitimate criticism, not only legitimate 
criticism, but necessary criticism which is essential to 
good government in any land. I have thought for a 
long time that it is not fair that the person who holds 
the position of leader of the opposition should be 
called upon to give his services to the country without 
any remuneration at all." 

This is but a further evidence of the development 
of our system of responsible government. We do not 
doubt for a moment that the leader of the opposition 
has great labors to perform. We who watch the man, 
whoever he may be, who occupies that position, from 
day to day know that he is obliged to be most diligent 
and watchful and that he is no less responsible in 
the way of attendance on the House than any cabinet 
minister and that he has to devote to his public duties 

1 Sir Wilfrid Laurier — Can. Hansard, 190S, p. 9729. 

130 



PARLIAMENTARY ACTION UPON ESTIMATES 

as much time as any minister. Even out of session 
he has large and important responsibilities which 
under our system of government seem to be necessary 
for the working out of our own government/ 

If it be accepted that members of the Opposition have 
certain duties to perform and that they should devote 
their talents and energies to help perfect by intelligent 
and useful comment the legislation of the country, they 
should be given free scope for the carrying out of their 
functions. Considering that there can be no good gov- 
ernment without opposition criticism, it can only be 
termed strange that Canadian party leaders have not 
taken more steps to make such criticism effective. Yet, 
as will be pointed out in a later chapter, we shall see 
them countenancing a course of procedure at the ses- 
sions of the Public Accounts Committees which prevents 
any thorough investigation into government expendi- 
tures. This policy is all the more short-sighted for the 
reason that there is a certain tendency in all govern- 
ments to become lax or even corrupt after they have 
been in power for a considerable interval. If the 
Opposition are allowed full rein to their investigations 
there is greater likelihood that improper expenditures 
will be discovered at the outset. This is particularly 
true of the expenditures of the Public Works Depart- 
ment which has been termed **the great spending de- 
partment, the possible great jobbery department, the de- 
partment that can make or ruin a government." ^ 

On account mainly of this limitation of the most im- 
portant duty of the Opposition, the political pendulum in 

1 Hon. Mr. Fielding — Can. Hansard, 1905, p. 9730. 

2 Hon. Alexander Mackenzie, letter of April 2^, 1875. 

131 



THE CANADIAN BUDGETARY SYSTEM 

Canada, in the Provinces especially, has been apt to 
swing with extreme violence from one side to the other. 
The history of the l^te conservative Government in 
British Columbia is a case in point. Originally elected 
as a reform administration, it rigorously cut down ex- 
penditure at first and enforced economy in all branches 
of the public service. Later on, with no opposition 
party of any moment to act as a damper, the Govern- 
ment threw caution to the winds and embarked on a 
policy of lavish expenditures. Many irregularities 
having come to light, the Government was swept from 
power in the election of 1 916. In place of securing only 
two out of a total of forty-seven districts as previously, 
the Opposition carried all but ten districts at the last 
election. Possessing such an overwhelming majority 
and faced wi'th a numerically weak and thoroughly dis- 
credited Opposition, the new Government, composed of 
the members of the former Opposition, may succumb in 
time to the same temptations which wrecked the lately 
dismissed administration and may in turn be dismissed 
for improperly handling the provincial finances. 

As the Opposition in Canada is prevented from 
properly investigating past expenditures, its activities, 
as far as budget procedure is concerned, are confined to 
a criticism of proposed government outlays as revealed 
in the Estimates submitted to Parliament. The lines 
which this criticism should follow have been described as 
follows : 

Where an opposition are not able to get, within a 
reasonable time and without unduly protracting the 
session, information which would enable them to 
discriminate between hundreds of items brought 
down to this House, when they are unable to get 

132 



PARLIAMENTARY ACTION UPON ESTIMATES 

information which would put them in the same posi- 
tion for forming an opinion that the government are 
in, the proper duty for an opposition is to protest 
against excessive expenditure, to throw upon the 
government the responsibility for making it, knowing 
as they do that the government have within their 
power the means of reducing that expenditure by 
eliminating from it items which are less worthy of 
public appropriation than those which are necessary 
to be made. That is the view which has been put 
forward in the English House of Commons as a sound 
principle, that an opposition in protesting, as we have 
protested, against undue expenditure have discharged 
their duty without dealing in detail with the particu- 
lar items of the expenditure brought down by the 
government/ 

In conclusion, the following extract may profitably be 
quoted on the question whether or not an Opposition 
should content itself with a mere criticism of the govern- 
ment's Estimates: 

We are told by the Minister of Finance of this 
country that because the opposition did not divide the 
House on an estimate, therefore they consented to it. 
Let him read the speech of Mr. Chamberlain where 
he shows the absurdity of such an argument, let him 
read the speeches of leading statesmen in England 
on the same subject, and he will find that they hold 
the principle that the duty of an opposition is merely 
criticism, not to divide the House on an item, but to 
leave the entire responsibility with the government 
who propose it. If we do not divide the House upon 
it, that is no reason why we should be accused of 
supporting the vote. . . . Our opposition is not so 
much for the purpose of influencing the government 
as for the purpose of influencing the country, because 

1 Mr. Borden — Can. Hansard, 1902, p. 4821. 

133 



THE CANADIAN BUDGETARY SYSTEM 

we know we are in a minority in this House. . . . 
The position we occupy as a party is that for every 
item in the estimates the government of the day are 
responsible, and that our functions are confined to 
criticising an item we object to/ 

1 Mr. Haggart — Can. Hansard, 1902, p. 1271. 



134 



CHAPTER VIII 

ORGANS AND OFFICERS FOR THE ADMINIS- 
TRATION OF THE FINANCES 

In broad outlines the law regarding the custody, dis- 
bursement and audit of public funds is to be found in the 
two statutes: "An Act Respecting the Department of 
Finance and the Treasury Board/' and "An Act Re- 
specting the Public Revenue, the Raising of Loans 
Authorized by Parliament, and the Auditing of the Pub- 
lic Accounts," the short titles of which are "Department 
of Finance and Treasury Board Act," and "Consolidated 
Revenue and Audit Act."' 

Before proceeding to a consideration of the procedure 
employed by the Canadian government for the receipt, 
custody, issue, expenditure and audit of public funds, 
mention should first be made of the several organs and 
officers that have been created by the Dominion for the 
handling of these affairs. 

Parliament as the Fund Raising and Granting 
Authority. At the top of the system is, of course, 
Parliament itself. It is the body which prescribes what 
revenues shall be collected and to what purposes the 
money so raised shall be applied. Its function, how- 
ever, does not cease here. It is its duty to see that the 
revenues authorized to be collected shall be duly collected 
and deposited in the public treasury, that the funds 
granted by it shall be expended for the purposes specified 
by it and for those purposes only, and that a due account- 
ing is had of all moneys so collected and expended. For 

1 The text of these acts is given in Appendices i and 2. They 
constitute Chapters 23 and 24 of the Revised Statutes of Canada, 1906. 

135 



THE CANADIAN BUDGETARY SYSTEM 

this purpose it has made provision for two officers or 
organs, the Auditor General and the Committee on Ac- 
counts, the functions and duties of which will hereafter 
be more specifically described. 

The Governor in Council. Next in authority is the 
Governor in Council. By this term is meant the Cabinet 
sitting formally for the taking of action and especially 
the issuance of orders known as "Orders in Council" in 
pursuance of authority vested in it by act of Parliament 
or Royal Prerogative.^ A reading of the two acts re- 
specting the Department of Finance and the Treasury 
Board, and the Public Revenue and Auditing of Public 
Accounts, which are reproduced in the Appendices, 
shows that Parliament has by formal act vested in this 
body exceedingly broad powers in respect to the deter- 
mination of how the public revenue shall be collected, 
cared for and disbursed. 

Thus, for example, in respect to the management of 
the public debt the act prescribes that : — 

The Governor in Council may from time to time — 

(a) make such regulations as he deems necessary 
for the management of the public debt of Canada and 
the payment of the interest thereon; and 

(b) subject to the provisions of the two next fol- 
lowing sections, provide for the creation and manage- 
ment of a sinking fund or other means of securing 
the repayment of any loans raised under the authority 
of Parliament ; and 

(c) appoint one or more fiscal agents of Canada in 
the City of London, England, or elsewhere, and agree 

1 Though the term employed is "Governor in Council" it is hardly 
necessary to say that the Governor does not personally participate 
in any way in proceedings of the Council or Cabinet. The phrase is 
employed since all the action taken is taken in his name in the same 
way that the acts of the British Cabinet are performed in the name 
of Crown. 

136 



ORGi\NS AND OFFICERS 

with them for negotiating loans, and for paying the 
interest on the public debt, and for other services 
connected with the management of the said debt; and 
(d) pay the sums necessary to provide such sink- 
ing fund or other means as aforesaid, and such com- 
pensation, out of the Consolidated Revenue Fund. 

Again, in respect to the collection of the revenue it is 
provided : — 

The Governor in Council may, from time to time, 
determine what officers or persons it is necessary to 
employ in collecting, managing or accounting for the 
revenue, and in carrying into effect the laws there- 
unto relating, or for preventing any violation of such 
laws; and may assign their names of office, and such 
salaries or pay for their labours and responsibility 
in the execution of the duties of their respective offices 
and employments, as to the Governor in Council 
seems reasonable and necessary, and may appoint the 
times and manner in which the same shall be paid; 
Provided that no such officer so appointed shall 
receive a higher annual salary than is allowed in his 
case by any Act of the Parliament of Canada then in 
force respecting the Civil Service generally; nor shall 
any such salary be paid until voted by Parliament. 

The Governor in Council may, from time to time — 

(a) make such divisions of Canada into parts, 
revenue districts or otherwise, as are required with 
regard to the collection or management of the reve- 
nue; and 

(b) assign the ofHcers or persons by whom any 
duty or service relative to any such purpose shall be 
performed within or for any such district or division, 
and the places within the same where such duty or 
service shall be performed; and 

(c) make all such regulations concerning such 
officers and persons, and the conduct and manage- 
ment of the business to them entrusted, as are con- 



THE CANADIAN BUDGETARY SYSTEM 

sistent with the law, and as he deems expedient for 
carrying it into effect, in the manner best adapted 
to promote the public good. 

There are a large number of other provisions scat- 
tered through the Consolidated Revenue and Audit Act 
vesting power in the Governor in Council in respect to 
the administration of the finances of the nation. The 
sections quoted, however, serve to illustrate the extent 
to which the Canadian Parliament has departed from 
the principle usually followed by the American Con- 
gress, of seeking to prescribe in detail through statute 
how administrative services shall be organized and con- 
ducted. The superior flexibility thus given to the 
administration system and its ability to meet new con- 
ditions as they arise need not be commented upon. 

In considering these powers of the Canadian Cabinet 
note should also be taken of the powers conferred upon 
the Treasury Board, an organ about to be described 
since that body is in effect but a committee of the Cabinet 
for finance matters. 

The Treasury Board. The establishment of this 
important body is provided for by the following sections 
of the Department of Finance and Treasury Board Act. 

There shall be a Board to be called the Treasury 
Board, consisting of the Minister of Finance and any 
five of the ministers belonging to the King's Privy 
Council for Canada, to be nominated from time to 
time by the Governor in Council. 

The Treasury Board shall act as a committee of 
the King's Privy Council for Canada, on all matters 
relating to finance, revenue and expenditure, or public 
accounts, which are referred to it by the Council, or 
to which the Board thinks it necessary to call the 
attention of the Council, and shall have power to 

138 



ORGANS AND OFFICERS 

require from any public department, board, officer, or 
other person, bound by law to furnish the same to the 
Government, any account, return, statement, docu- 
ment, or information which the Board deems requi- 
site for the due performance of its duties. 

The Minister of Finance shall be the Chairman of 
the Treasury Board, and the Deputy Minister of 
Finance shall be ex officio the Secretary thereof, and 
through him the Board shall communicate with any 
public department, officer, or other person. 

A plan of account books and accounts, adapted to 
the requirements of each department or branch of 
the public service, in order to exhibit in convenient 
form the whole of the receipts and payments in 
respect of each rate, shall be designed under the 
superintendence of the Treasury Board; and the 
Governor in Council may, on report from the Treas- 
ury Board, prescribe, from time to time, the manner 
in which each Department of the public service shall 
keep its accounts. 

The Treasury Board may direct any officer or 
person employed in collecting, managing or account- 
ing for any branch of the revenue, to keep any books 
or accounts which it deems advisable to direct to be 
kept for the purpose of obtaining and furnishing any 
statistical information concerning the trade or com- 
merce of Canada, the public works thereof, or other 
matters of public interest. 

These duties are materially supplemented by pro- 
visions contained in the Consolidated Revenue and 
Audit Act which makes constant allusion to action that 
is to be taken by the Treasury Board. This act thus 
provides ; that every public officer into whose hands come 
any public moneys, whether in the nature of revenue or 
fees of office, or whose duty it is to pay out public moneys 
shall render an account of such receipts and payments 

139 



THE CANADIAN BUDGETARY SYSTEM 

to the Auditor General at such times and in such form 
as the Treasury Board shall prescribe ; that the Treasury 
Board may alter the time at or to which any accountant 
for public mioneys, public officer, corporation or institu- 
tion is required to render any account or to make may 
return whenever in its opinion such alteration will facili- 
tate the correct preparation of the public accounts or 
estimates for the fiscal year; that the Treasury Board 
may, from time to time, appoint the times and mode in 
which any officer or person employed in the collection 
or management of, or the accounting for, any part of 
the revenue, shall account for and pay over the public 
moneys which come into his hands and determine the 
times and mode in which, and the officer by whom, any 
licenses on which any duty is payable are to be issued; 
and that the Minister of Customs, the Minister of In- 
land Revenues, the Postmaster General and all other of- 
ficers charged with the receipt of public moneys shall 
render daily account to the Auditor General of the money 
so collected and deposited in bank to the credit of the 
Minister of Finance and Receiver General in such form 
as the Treasury Board shall prescribe. 

It will be seen from these provisions that the Treasury 
Board is the body to which is entrusted the authority to 
prescribe the whole system of government accounting 
and reporting, subject only to certain general provisions 
which are contained in the Consolidated Revenue and 
Audit Act. This body thus has ample power to pre- 
scribe and enforce a system of accounting and reporting 
that shall be uniform throughout all government ser- 
vices. It does not appear, however, that this authority 
has been affirmatively exercised, with the result that the 
several services in large part determine for themselves 

140 



ORGANS AND OFFICERS 

how their accounts shall be kept and their reports pre- 
pared. 

Another most important function of the Treasury 
Board is that of acting as a board for passing upon 
appeals from decisions of the Auditor General with 
reference to both the issue of money from the Treasury 
and the propriety or legality of disbursements. This 
function, however, is one which it is better to describe 
when the procedure employed in making issues from the 
treasury and in auditing accounts of disbursements is 
considered. 

Finally, mention should be made of the fact that the 
Treasury Board has been given certain duties with 
reference to the administration of the systems of savings 
banks, penny banks and insurance, and that, in its 
capacity as a committee of the Cabinet, it plays an im- 
portant role in the way of relieving the latter body of 
many details of administration. To it come, for ex- 
ample, such matters as proposed appointments and pro- 
motions, questions of salaries, pensions, allowances and 
leaves of absence. In these cases the decisions of the 
board are not final, but must be reported to the Council 
for its approval. It has been suggested that many of 
these duties are not important enough to require the 
personal attention of the entire Cabinet or of a committee 
of six of its members, and that their performance might 
better be handed over to the heads of the departments 
concerned, or, with reference to promotions and appoint- 
ments, to a specially constituted board. ^ 

Department of Finance. For the actual conduct of 
financial affairs provision is made for a service known 

^ See report by Sir George Murray on the Organization of the 
Public Service of Canada, 1912, p. 9. 

141 



THE CANADIAN BUDGETARY SYSTEM 

as the Department of Finance. The duties of this de- 
partment, as set forth in the Department of Finance and 
Treasury Board Act, are to have "the supervision, con- 
trol and direction of all matters relating to the financial 
affairs of public accounts, revenue and expenditure of 
Canada, which are not, or in so far as they are not, by 
law, or by order of the Governor in Council, assigned 
to any other department of the Government, and such 
other duties as are, from time to time, assigned to it by 
the Governor in Council." 

At the head of this department is placed an official 
usually known as Minister of Finance, but whose full 
title is Minister of Finance and Receiver General. He 
is appointed by the Governor General in Council and 
holds office during pleasure ; that is, of course, as long as 
the political party to which he belongs remains in power. 
He is, in fact, a high political officer and one of the most 
important members of the Canadian Cabinet. His 
duties are primarily political. Only in relatively slight 
degree does he concern himself with the actual work of 
administering the affairs of his department. 

The real administrative head of the Finance Depart- 
ment is the Deputy Minister of Finance and Receiver 
General, who is likewise appointed by the Governor 
General in Council and holds office during pleasure. 
The act thus provides : 

The Deputy Minister of Finance shall, under the 
Minister of Finance, keep the accounts with the 
financial agents of Canada in England and with the 
bank or banks receiving or paying public moneys, and 
the accounts of moneys paid for interest on Canadian 
stock, debentures or other Canadian securities. 

The Deputy Minister of Finance shall classify all 
appropriations of public moneys and keep posted up 

142 



ORGANS AND OFFICERS 

a book to be called the appropriation book, containing 
an account, under separate and distinct heads, of 
every such appropriation, whether permanent or 
temporary, entering under each head the amounts 
drawn on account of such appropriation with the 
dates and names of the persons to whom payments 
are made; and shall, under the Minister of Finance, 
keep the public accounts of Canada. 

All returns and statements required from savings 
banks, chartered or other banks, and all other insti- 
tutions required to make financial statements or re- 
turns, shall, when no other provision is made in that 
behalf, be transmitted to the Deputy Minister of 
Finance. 

It will be seen from the sections which have been 
quoted that the Deputy Minister of Finance is, by 
statute, placed at the head of the accounting system of 
the government. 

It is also provided by the act that the Deputy Minister 
shall be ex officio Secretary of the Treasury Board. 

An inspection of the statutory provisions which have 
been quoted, and which practically exhaust the functions 
of the Department of Finance as laid down in this 
organic act, indicates that there is explicitly given to the 
department no such controlling authority over the ex- 
penditures of the other departments as is exercised by 
the Treasury of Great Britain. It would indeed be pos- 
sible, under the statute, for a practice to develop and a 
tradition to grow up which would endow the Finance 
Department with such a comprehensive and effective 
controlling authority. In fact, however, no such 
beneficent centralized directing financial control has 
come into being or indeed shown a tendency to develop. 
As has been earlier pointed out, the Minister of Finance 

143 



THE CANADIAN BUDGETARY SYSTEM 

is given the opportunity to inspect the estimates of the 
other departments before they are accepted by the 
Cabinet for presentation to Parliament, and this oppor- 
tunity is undoubtedly made use of to urge economies 
upon the other services, but these urgings haye not the 
weight that those of the British Treasury have, and, at 
the best, in almost all cases they relate ito totals rather 
than to specific items. In other words, as has been 
earlier pointed out, the main concern of the Canadian 
Minister of Finance is to see that the total amounts of 
supply that it will be necessary for the Cabinet to ask of 
Parliament shall not be greater than is desirable from 
the standpoint of political party expediency. 

Though primarily but a department for the handling 
of the bookkeeping operations of the government, the 
Department of Finance also performs certain other 
duties which have been imposed vipon it by statute. 
Thus, for example, pensions, superannuation allowances, 
and subsidies to the Provinces are placed more or less 
Vmder the control of the Finance Department. These, 
it is evident, are functions largely of a bookkeeping 
character. But, in addition, a considerable number of 
miscellaneous matters have been imposed upon the de- 
partment, as for example, the Ottawa Improvement 
Commission, the National Battlefields Commission, the 
Academy of Arts, and other scientific and patriotic 
orders, the Ottawa Branch of the Royal Mint, etc. It 
should also be added that the Comptroller of the Domin- 
ion Currency is an official under this department as are 
also the Commissioner and Assistant Commissioner of 
Taxation. 

It will thus be seen that the Canadian Department of 
Finance, as regards its functions and political influence, 

144 



ORGANS AND OFFICERS 

stands about midway between the British Treasury and 
the Treasury Department at Washington. It has more 
influence over the general estimates and expenditures 
of the other services of the general government than has 
the American Treasury, but far less than has the British 
Treasury. It has more miscellaneous functions than 
has the British Treasury but less than the American 
Department. 

Chartered Banks of Canada as Custodians of the 
Public Funds. For the actual custody of the public 
funds use is made of the chartered banks of Canada and 
their many branches. These banks are designated by 
the Minister of Finance. The revenue is collected all 
over the Dominion. Generally speaking, the officers 
collecting such revenue, or having fees or public moneys 
of any kind coming into their hands, are required to de- 
posit such receipts daily in the local banks which have 
been designated by the Minister of Finance. Upon 
doing so they receive a receipt in triplicate — one for 
the depositor, a duplicate for his department, and a 
triplicate for the Receiver General. The triplicate has 
a draft attached made payable at par to the Receiver 
General at its branch at Ottawa where the government 
account is kept. 

These receipts and drafts flow in regularly, daily, 
through the mails and are brought to account in the 
books of the Finance Department. 

Though paid into the various banks throughout the 
Dominion at the places of collection, the general fiscal 
agent of the Dominion is the Bank of Montreal, the 
largest bank in Canada, and indeed one of the largest 
on the continent. Thus, as will presently appear, expen- 
ds 



THE CANADIAN BUDGETARY SYSTEM 

diture checks are drawn on that bank by the government 
which is reimbursed by checks in its favor drawn upon 
the government's balances in the other banks.^ No in- 
terest is paid by the banks upon the government's de- 
posits, and, reciprocally, no charge is made for the 
services performed by them for the government. There 
is undoubtedly opportunity for political favoritism in 
the designation of banks for deposits of public revenues, 
but it would not appear that this opportunity has been 
so greatly abused as to give rise to any serious injustices 
or charges of overt graft. 

The following statements from the "Civil Service of 
Canada,"^ gives further interesting details regarding the 
manner in which the current revenues of the Dominion 
are covered into the Consolidated Fund, and the current 
reports and statistics relating to them. 

A great number of the offices of the chartered 
banks in Canada are, in effect, sub-agencies of the 
Finance Department. On December 31, 1913, there 
w^ere 3,008 such offices doing business. In each city 
or hamlet, some bank or banks are authorized to 
accept deposits to the credit of the Receiver General. 
By an efficient voucher system these revenues are 
reported, by civil servants all over Canada, to the 
Deputy Minister of the department concerned in 
Ottawa. Daily or periodically, each department 

^ The following testimony by Sir Edward Clouston, General Man- 
ager of the Bank of Montreal, is reported by the National Monetary 
Commission in the volume entitled "Interviews on the Banking and 
Currency Systems of Canada," p. 154. Q. Do you have all the Gov- 
ernment business? A. We have the most of it, but a number of the 
other banks have small deposits. The principal account is kept with 
us. In fact we are the Government bankers. Q. You act as the 
official agent of the Government? A. Yes; here and in London. We 
issue all their loans. Q. That is because you are the largest bank; 
it has nothing to do with your charter conditions? A. No, simply 
because we have the Government business." 

2 A special issue of The Civilian, p. 51. 

146 



ORGANS AND OFFICERS 

sends a statement of revenues to the Department of 
Finance, and by a system of drafts, funds deposited 
in banks in remote parts of Canada are garnered and 
concentrated in the Ottawa branch of the bank con- 
cerned or in the head office, if there be no branch of 
the bank in the capital. There were on December 31, 
1913, twenty-four chartered banks, and this depart- 
ment employs nineteen of them for the purpose of 
collecting revenue. A splendid scheme has been 
devised to facilitate the handling of the revenue, 
which on some days amounts to a million and a half 
dollars. The congested mass of documents is sorted, 
vouchers made chargeable to the respective banks, 
and at 12:30 p. m. each day remittances are on the 
way to the bank in Ottawa by special messenger, or 
by the mail to the head office of banks not having an 
agency in Ottawa, and the cash and statements are 
put through the various ledgers of the department. 
* * H^ The Expenditure branch issues cheques, upon 
proper authorization, for all the expenditures of the 
Dominion, including repayments of Letter of Credit 
cheques. A record of the daily revenue is received 
from the Revenue branch, and a statement showing 
the amount of cash to the credit of the Receiver Gen- 
eral in nineteen Canadian banks, and in the Bank of 
Montreal, London, is placed on the Deputy Minister's 
desk at the close of each da3^'s v^^ork. 

Closely related to the two foregoing branches 
[Revenue and Expenditure] is the system that is 
justly the pride of the Department, known as the 
"Ten Day Ledger." This system has been developed 
by a gradual evolutionary process; the names of 
Nutting, Dickieson, and Eraser (now Auditor Gen- 
eral) being associated with its establishment. The 
scientific efficiency of the system m^ay be judged from 
the fact that three times in each month, on the loth, 
20th, and the last day, a statement of the financial 
affairs of the Dominion for the current fiscal year is 

147 



THE CANADIAN BUDGETARY SYSTEM 

placed on the desk of the Deputy Minister four or 
five hours after the close of business for the day. 
* * "^ In connection with this work there is kept an 
Appropriation Ledger, being a distribution, accord- 
ing to appropriation, of all expenditures made under 
parliamentary sanction. * * * The Department also 
publishes monthly statements in the ''Canadian 
Gazette," such as assets and liabilities of the Domin- 
ion, revenue and expenditure, the circulation of 
Dominion notes, the gold reserve, savings banks' 
statements, and a compilation of monthly returns of 
the banks, as required by law. 

The Auditor General. The expenditure of public 
funds involves, as we have seen, three distinct opera- 
tions; the issue from the public treasury of funds to 
officers charged with the payment of government obliga- 
tions, the actual disbursement of these funds by such 
officers, and the audit of these disbursements. The per- 
formance of, or control over, the first and third of these 
operations is in Canada entrusted to an officer known as 
Auditor General. 

This important official is appointed by the Governor 
General, as the act declares, "for the more complete ex- 
amination of the public accounts of Canada, and for re- 
porting thereon to the House of Commons." In fact, 
however, he deserves the title Comptroller and Auditor 
General for, as stated, his functions extend beyond those 
of audit and embrace comprehensive powers of control 
over proposed disbursements. In order that he may 
occupy an independent position, it is provided that he 
shall hold office during good behavior, subject only to re- 
moval by the Governor General on address of the Senate 
and House of Commons. He is also made subject to the 
Civil Service Superannuation and Retirement Act, ex- 

148 



ORGANS AND OFFICERS 

cept as to his tenure of office. His annual salary, origi- 
nally four thousand dollars, is now five thousand dollars. 
It is provided that "The Governor-General in Council 
shall, from time to time, appoint the officers, clerks and 
other persons in the office of the Auditor General, and 
may regulate the numbers and salaries of the respective 
grades or classes into which the said officers, clerks and 
others shall be divided." But, subject to approval by 
the Treasury Board, the Auditor General is given the 
authority to "make orders and rules for the conduct of 
the internal business of his office, and prescribe the regu- 
lations and forms for the guidance of principal ac- 
countants and sub-accountants in making up and render- 
ing their periodical account for examination." The 
Auditor General is also empowered to suspend or re- 
move from office any persons employed in his office and, 
subject to the provisions of the Civil Service Act, to pro- 
mote them for merit. The duties of this ofncer will be 
more specifically described when we consider the pro- 
cedure emxployed in making issues from the treasury and 
in auditing the accounts of disbursements. 



149 



CHAPTER IX 

ISSUE AND DISBURSEMENT OF PUBLIC 
FUNDS 

Having described the machiner}^ that exists for the 
administration of the financial affairs of the Dominion it 
remains for us now to consider the principles and pro- 
cedure employed in the actual performance of the work 
to be done. 

Issue of Public Moneys from the Treasury. As in 

the British, American and other constitutional systems, 
careful provision is made that no money shall issue from 
the public treasury except upon the warrant of some high 
officer whose duty it is to see that no such issue shall take 
place except when adequate warrant of law exists there- 
for. In Canada this offxer is the Auditor General. 
Thus Section 42 of the Consolidated Revenue and Audit 
Act declares that : 

No cheque for public money shall issue except upon 
the certificate of the Auditor General that there is 
parliamentary authority for the expenditure, save 
only in the following cases : 

These excepted cases are two in number and are pro- 
vided for in the following clauses which follow the one 
just quoted. 

(a) If, upon any application for a cheque, the 
Auditor General has reported that there is no parlia- 
mentary authority for issuing it, then upon the 
written opinion of the Minister of Justice that there 
is such authority, citing it, the Treasury Board may 
authorize the Deputy Minister of Finance to prepare 
the cheque, irrespective of the Auditor General's 
report; 

150 



ISSUE AND DISBURSEMENT OF FUNDS 

(b) If, when Parliament is not in session, any 
accident happens to any pubHc work or building 
which requires an immediate outlay for the repair 
thereof, or any other occasion arises when any ex- 
penditure, not foreseen or provided for by Parlia- 
ment, is urgentl}^ and immediately required for the 
public good, then upon the report of the Minister of 
Finance that there is no parliamentary provision, and 
of the minister having charge of the service in ques- 
tion that the necessity is urgent, the Governor in 
Council may order a special warrant to be prepared, 
to be signed by the Governor-General for the issue 
of the amount estimated to be required, which shall 
be placed by the Minister of Finance to a special 
account, against which cheques may issue from time 
to time in the usual form, as they are required. 

The succeeding section, moreover, provides that when 
the Auditor General refuses to direct the issue of money 
from the treasury on grounds other than that of par- 
liamentary authority therefor, an appeal from his de- 
cision lies to the Treasury Board which can override his 
decision and order the money to issue. In this case the 
securing of the opinion of the Minister of Justice is not 
required. The provisions of the act covering this mat- 
ter are as follows : 

If the Auditor General has refused to certify that 
a cheque of the Minister of Finance may issue, on the 
ground that the money is not justly due, or that it is 
in excess of the authority granted by Council, or for 
any reason other than that there is no parliamentary 
authority, then upon a report of the case prepared 
by the Auditor General and the Deputy Minister of 
Finance, the Treasury Board shall be the judge of 
the sufficiency of the Auditor GeneraFs objection and 
may sustain him or order the issue of the cheque in 
its discretion. 

151 



THE CANADIAN BUDGETARY SYSTEM 

The Auditor General shall, in all cases mentioned 
in the two sections last preceding, prepare a state- 
ment of all such legal opinions, reports of council, 
special warrants and cheques issued without his cer- 
tificate, and of all expenditures incurred in conse- 
quence thereof, which he shall deliver to the Minister 
of Finance, who shall present the same to Parliament 
not later than the third day of the session thereof 
then next ensuing. 

These provisions represent a practice that is in marked 
contrast to the British system. Under the latter sys- 
tem the Comptroller and Auditor General, the officer 
corresponding to the Auditor General of Canada, is an 
officer of Parliament. As such it is his primary duty to 
see that the commands of his principal are rigidly com- 
plied with. He is the one authority through which, in 
matters financial, the Executive is prevented from ex- 
pending one penny which has not been authorized by 
Parliament. There is no way by which the Executive 
can control or overrule his decisions in respect to the 
authorizing of the issue of money from the treasury. 

In the Canadian system the Auditor General has more 
the status of an officer of the executive branch of govern- 
ment and, as indicated by the sections of the act quoted, 
his decisions both in respect to the issue of money from 
the treasury and, as will later appear, in respect to the 
allowance of particular disbursements, can in cases be 
overruled by a superior executive authority. 

It should be noted, however, that care has been taken 
to give to the Auditor General independence in the exer- 
cise of his duties through the provision giving to him a 
status similar to that of judges in that he can be removed 
from office only on an address of the two Houses of Par- 
liament, and that, when his decision is based upon the 

152 



ISSUE AND DISBURSEMENT OF FUNDS 

contention that parliamentary authority for the issue of 
the money does not exist, his decision can be overruled by 
the Treasury Board only upon the written opinion of the 
Minister of Justice that there is parliamentary authority 
for the issue of the money. In all cases, also, where the 
action of the Auditor General is overruled a full report 
must be made to Parliament by the Minister of Finance. 

The provision authorizing the issue and expenditure 
of money that has not been appropriated by Parliament 
through the use of Governor General's warrants is like- 
wise a wide departure from both British and American 
practice. The practical operation of this system is else- 
where fully described and commented upon. 

Turning now to the procedure employed in securing 
the issue of money from the treasury, the Consolidated 
Revenue and Audit x\ct provides : 

When any sum of money has been granted to His 
Majesty by ParUament to defray expenses for any 
specified public service, the Governor-General may, 
from time to time, under his sign manual, counter- 
signed by a member of the Treasury Board, authorize 
and require the Minister of Finance to issue out of 
the moneys in his hands, appropriated for defraying 
the expenses of such service, the sums required, from 
time to time, to defray such expenses, not exceeding 
the amount of the sum so voted or granted. 

When any sum of money has been granted to His 
Majesty by Parliament to defray expenses for any 
specified public service, and as soon as the Governor- 
General has issued his warrant authorizing the pay- 
ment of such sum or sums as are required to defray 
such expenses, the Minister of Finance may, from 
time to time, on the application of the Auditor Gen- 
eral cause credits to be issued in favor of the deputy 
heads, officers, clerks or other persons connected with 

153 



THE CANADIAN BUDGETARY SYSTEM 

the several departments or services charged with 
expenditure of the moneys so authorized. 

Such credits shall issue on the several banks author- 
ized to receive public moneys. 

Statements in duplicate of moneys drawn for under 
such credits, together with the cheques paid by the 
banks in connection therewith, shall be rendered 
under such forms, and once in each month or more 
often, at such times as the Treasury Board directs, 
one duplicate of such statement, together with the 
cheques, shall be rendered to the Auditor-General, 
and the other duplicate to the Minister of Finance. 

The Auditor General, being satisfied of the correct- 
ness of the statement, may request the Minister of 
Finance to cause cheques to be prepared to reimburse 
the banks for advances vmder such credits to cover 
the expenditures made or authorized. 

Such cheques shall be signed by the Minister of 
Finance and countersigned by the Auditor General, 
or signed and countersigned by their respective depu- 
ties or officers thereunto duly authorized. 

No such credit shall issue in favor of any offxer or 
other person in excess of any appropriation author- 
ized by act of Parliament.^ 

From these statutory provisions the procedure by 
which public moneys are paid out from the Consolidated 
Fund is made fairly plain. It will, however, be advisable 
to recapitulate the various steps. 

As in England, an appropriation or supply bill having 
been passed by the Parliament and having received the 
assent of the Governor General, the effect is to place the 

1 Certain payments are statutory and do not require annual appro- 
priations, such as interest on and redemption of public debt, the 
Governor General's salary, salaries of Lieutenant Governors, Ministers 
of the Crown, the Auditor General, judges' salaries, subsidies to 
Provinces, indemnities to Senators and Members, superannuation and 
certain pensions and other payments extending over a term of years 
and authorized by Special Acts of Parliament. 

154 



ISSUE AND DISBURSEMENT OF FUNDS 

sum specified at the disposal of the Executive. The first 
step then for its expenditure is to obtain an order from 
the Executive, that is, from the Governor in Council, 
authorizing the issuance of a certain amount from the 
treasury and placing it at the disposal of a specified pub- 
lic service.^ The various departments make application 
to the Minister of Finance that this be done. Usually 
about a month's requirements are asked for. These ap- 
plications are passed over to the Auditor General who 
satisfies himself that Parliament has made the necessary 
appropriations and then issues a certificate that is termed 
a "Letter of Credit'' on a bank which has government 
funds on deposit. 

The letter of credit is then issued by the Finance De- 
partment and bears the countersignature of the Auditor 
General. Its effect is to authorize the bank to pay all 
checks drawn by the department concerned. These 
checks are payable at par throughout Canada and are 
charged by the bank to its Letter of Credit Account. 

Disbursement of Public Funds. As in the United 
States government, claims against the government may 
be settled and paid in two ways : One, on the direct order 
of the Auditor General by means of what in the United 
States is known as a settlement warrant; and, two, bv 
payment by a disbursing officer out of funds which have 
been placed at his disposal through a letter of credit. 

There are two methods whereby accounts may be 
paid. One is what I may call the letter of credit 
system and the other deals with the payment of ac- 
counts in a somewhat different way. Under the letter 
of credit system, where an appropriation has been 

1 Or in certain cases the disbursement may be made directly from 
the treasury. The payments thus made correspond to what are known 
in the United States as "settlement warrants." 

155 



THE CANADIAN BUDGETARY SYSTEM 

made to a given department, a certain part of that 
appropriation is placed to the credit of the depart- 
ment in the form of a letter of credit given to one of 
the banks. In that case parties having claims against 
the department can go directly to the department and 
upon their claims being properly certified can receive 
their money at once. Perhaps by way of illustration, 
we might take the case that w^as brought to our notice 
the other day in connection with the indemnity of 
members. That is paid by the letter of credit system. 
... A member will go to the clerk's office in one of 
the neighboring rooms, and upon satisfying the clerk 
that he is entitled to his indemnity, receives a check 
which is the equivalent of money, and the transaction 
is closed. That method runs through all the depart- 
ments to which letters of credit are issued. The other 
method is by direct audit of each account. If I were 
to apply it to the case of a member of Parliament, 
instead of going to a neighboring room and getting 
the amount at once from the clerk, he would satisfy 
the clerk that the amount was due. Thereupon a 
certificate would issue and an application be made to 
the Auditor General. The Auditor General, having 
in due course certified that the amount was due, 
would make application to the Minister of Finance, 
who in due course would authorize the payment, and 
ultimately the party concerned would get his money. 
By the letter of credit system he gets the money 
immediately, while under the other system, he is 
obliged to pass through the direct audit system, and 
that involves sometimes necessarily, and sometimes 
unnecessarily, we think, a considerable amount of 
delay.^ 

As soon as this letter of credit has been issued, the de- 
partment is at liberty, as has been said, to issue against 
the amount named therein its own checks. Statements 

^ Mr. Fielding — Can. Hansard, 1903, pp. 11, 159. 

^ ,_. 156 



ISSUE AND DISBURSEMENT OF FUNDS 

are made out in duplicate of all the moneys paid out 
under each individual letter of credit. One of these 
with the checks actually issued goes to the Auditor Gen- 
eral and the other is sent to the Minister of Finance. If 
satisfied as to the correctness of the statement submitted 
and with the proof furnished that the moneys paid have 
been received by those to whom it was really due, the 
Auditor General then requests the Minister of Finance 
to have a check made out in favor of the bank to re- 
imburse it for the advances made by it under the letter of 
credit. 

A statement of the checks drawn, with vouchers, is 
rendered monthly to the Auditor General and having 
been found correct a certificate is issued to the Finance 
Department to issue a check in favor of the bank to 
cover these advances. This check is drawn against the 
Receiver General's account and countersigned by the 
Auditor General and the payments charged against the 
several appropriations concerned. 

For convenience and safety there are some expendi- 
tures audited before payment, such as progress estimates 
on large contracts for public works, subsidies to railways, 
subsidies to Provinces, etc., and in these cases a certifi- 
cate is issued by the Auditor General that a check may 
issue on the Receiver General's account. This check 
will then be issued by the Finance Department. 

For convenience, where paymasters are located in dis- 
tant parts of the Dominion, a letter of credit is issued in 
favor of the paymaster and his accountant in the same 
manner as to his department. For instance a letter of 
credit is issued to the General Manager and Accountant 
of the Intercolonial Railway, whose headquarters are at 
Moncton, in New Brunswick, and all the railway em- 

157 



THE CANADIAN BUDGETARY SYSTEM 

ployers are paid by check. No cash is placed in the 
hands of paymasters. All letter of credit checks must 
be made payable to order and these checks are good 
evidence of payment. Payments in foreign countries 
are made by bills of exchange purchased by the Finance 
Department. 

Payments of judges' salaries and certain public func- 
tionaries, who are appointed for life or good behavior, 
superannuation allowances and pensions, where the 
amounts a'te fixed charges, are paid in a different man- 
ner, viz., the payee names the bank and place at which he 
desires to draw his pay. On the certificates of the Audi- 
tor General the Finance Department issues an order to 
the bank to pay so and so on deposit of his receipt, with 
certain evidence that he is living, so much per month 
until otherwise instructed. The banks send these re- 
ceipts to their branch at Ottawa who are in turn re- 
imbursed by a check of the Finance Department, usually 
monthly. Any bank where the man is satisfactorily 
identified will cash these receipts at par. This system 
saves the issue of thousands of checks and has been 
found perfectly safe. 

It will be remarked that the Canadian system does not 
provide for a Paymaster General, as does the British 
system, but conforms to the American system under 
which all claims, except those paid on the direct order 
of the Auditor General, are paid by disbursing officers 
attached to the several services of the government. 



158 



CHAPTER X 
AUDIT OF PUBLIC ACCOUNTS 

Audit of Disbursements. The Consolidated Reve- 
nue and Audit Act provides in detail for the manner in 
which all disbursements shall be audited. In view of the 
fact that this act is reproduced in full as an Appendix it 
will not be necessary to do more than point out certain 
of its important features. 

The first of these is that provision is made that the ac- 
counts shall be audited in the first place by the accounting 
officers of the departments having the expenditure of the 
funds granted. Section 55 of the act thus reads: 

The deputy heads of the several departments or 
its officers, clerks or other persons charged with the 
expenditure of public moneys, shall respectively audit 
the details of the accounts of the several services in 
the first instance, and be responsible for the correct- 
ness of such audit. 

The accounts as so audited are then transmitted to 
the Auditor General by whom, as it is expressed in the 
act, they shall be examined "on behalf of the House of 
Commons." It would appear that this examination 
need not amount to a detailed reaudit of the accounts 
except in so far as either the Auditor General himself or 
the Minister of Finance deems it desirable that such a 
detailed reaudit shall be made. It is thus provided in 
Section 59 of the act that : 

If the Auditor General is satisfied that the accounts 
bear evidence that the vouchers have been completely 
checked, examined and certified as correct in every 
respect, and that they have been allow^ed, and passed 
by the proper departmental officers, he may admit the 

159 



THE CANADIAN BUDGETARY SYSTEM 

same as satisfactory evidence of payment in support 
of the charges to which they relate: Provided that, if 
the Minister of Finance desires any such vouchers to 
be examined by the Auditor General in greater detail, 
the Auditor General shall cause such vouchers to be 
subjected to such further examination in detail as the 
Minister of Finance thinks fit to prescribe. 

This examination of the accounts by the Auditor Gen- 
eral is not postponed until the end of the year but pro- 
ceeds currently, the act providing that : 

The Auditor General shall, in order that such ex- 
amination may, as far as possible, proceed pari passu 
with the cash transactions of the several accounting 
departments, have free access, at all convenient times, 
to the books of account and other documents relating 
to the accounts of such departments, and may require 
the several departments concerned to furnish him, 
from time to time, or at regular periods, with accounts 
of the cash transactions of such departments respect- 
ively up to such times or periods. 

In addition to other provisions that must be met the 
act contains the following important requirement : 

No payment shall be authorized by the Auditor 
General in respect of work performed, or material 
supplied by any person in connection wnth any part 
of the public service of Canada, unless in addition to 
any other voucher or certificate which is required in 
that behalf, the ofHcer, under whose special charge 
such part of the public service is, certifies that such 
work has been performed, or such material supplied, 
as the case may be, and that the price charged is 
according to contract, or if not covered by contract, 
is fair and just. 

The Treasury Board as an Organ of Appeal. One 

of the most important features of the Canadian auditing 

1 60 



AUDIT OF PUBLIC ACCOUNTS 

system is the fact that the Auditor General's ruHiigs are 
not in all cases final. We have already seen that where 
the Auditor General has refused to issue his warrant for 
the issue of money from the treasury on the ground that 
parliamentary authority therefor is lacking, or for other 
reasons, that an appeal may be taken from his decision 
to the Treasury Board, and that the latter may order the 
money to issue notwithstanding the refusal of the 
Auditor General to act. 

A similar right exists to appeal from the decision of 
the Auditor General to the Treasury Board when the 
former refuses to allow an item in making his audit of 
disbursements. The act thus provides that : 

If, during the progress of the examination by the 
Auditor General hereinbefore directed, any objection 
arises to any item to be introduced into the appropri- 
ation account of any grant, such objection shall, 
notwithstanding such account has not been rendered 
to him, be immediately communicated to the depart- 
ment concerned; and if the objection is not answered 
to his satisfaction by such department, it shall be 
referred by him to the Treasury Board, and the 
Treasury Board shall determine in what manner the 
items in question shall be entered in the annual appro- 
priation account. "^ 

^ For an account of a number of the overrulings of the Auditor 
General by the Treasury Board, together with all correspondence 
relating thereto, see the Auditor General's Annual Report for 1902- 
1903. The following may be given as a typical minute of the Treasury 
Board ordering the issuance of a check notwithstanding the objection 
of the Auditor General. 

"Treasury Board Minute, February 16, 1904. — The board had under 
consideration the correspondence in connection with the appeal by the 
Post Office Departrnent from objections raised by the Auditor General 
regarding the appointment and payment of certain third-class clerks 
in that department. 

"The objections of the Auditor General having been taken under 
subsections (a) and (c) of section 32 of the Consolidated Revenue and 
Audit Act, the board had under consideration a report from the 
Deputy Minister of Finance under date February 10, 1904, presented 
in accordance with subsection (c) of said section 32, and the docu- 

161 



THE CANADIAN BUDGETARY SYSTEM 

In fact the number of overrullings of the Auditor Gen- 
eral is not very great, and though no serious misuse of 
its authority by the Treasury Board is charged, the prac- 
tice has not escaped the criticism that the board is apt to 
decide against the Auditor General in favor of the de- 
partment head. Thus we find one critic saying: 

There can be no impartial tribunal where men are 
the judges of their own case, and that is the condition 
we have, so far as the Treasury Board is concerned. 
In many cases one of the members of that board is a 
minister who is in direct conflict with the Auditor 
General for the time being, and it is only natural that 
they should consider the matter more or less biased 
in favor of the department, and prejudiced to some 
extent against the Auditor General." 

In reply to this criticism, one of Canada's foremost 
statesmen has said : 

The only argument which my honorable friend 
(Mr. Lennox) has brought against the present Audit 
Act is that in the case of differences of opinion be- 
tween the Auditor General and the Government, 
these differences are referred to the Treasury Board, 
vv^hich simply means making the Government the 
judges in their own case. I do not dispute that the 
Government are a committee of Parliament charged 
with the executive government of the country; it is 
their duty to carry out the will of Parliament, and in 
doing so dift'erences of opinion arise between the 

ments referred to in such report. The board had also under consider- 
ation a letter from the Deputy Minister of Justice, dated February 12, 
1904, in which he states that he is of opinion that sections 20 and 28 
of the Act of last session (chapter 9), in amendment to the Civil 
Service Act, afford parliamentary authority for the appointment and 
the payment of the salaries of the third-class clerks in question, in 
which view he states that the Attorney General of Canada concurs. 

"The board are of opinion that the objections of the Auditor 
General are not well taken and should be overruled, and they direct 
that payment be made of the salaries of the third-class clerks in 
question. "J, M. Courtney, Secretary." 

1 Mr. Lennox — Can. Hansard, 1905, p. 9624. 

162 



AUDIT OF PUBLIC ACCOUNTS 

Government and the Auditor General which when 
referred to the Treasury Board practically come 
before the Government again. My honorable friend 
says that the Government are asked through the 
Treasury Board to revise their own acts. But, to 
put it more correctly, it is a reference to the Govern- 
ment to judge between the Auditor General and the 
minister who asked for the appropriation. * ^ * 
A reference is made to the Treasury Board which is 
in effect the Government. But there is something 
above the Government, and that something is Parlia- 
ment. Parliament can revise the decision of the 
Government, and it is the duty of the Auditor General 
to refer to ParHament immediately upon its assem- 
bling the differences of opinion which have arisen 
between himself and the Government. Parliament 
then has the duty of pronouncing upon the action 
of the Government and of the Auditor General.' 

Of the plan to substitute a court of law for the Treas- 
ury Board, the same speaker had this to say : 

The change which the Auditor General wanted was 
that some judicial authority should be substituted for 
the Treasury Board. If that amendment had been 
adopted, the result would have been that a judicial 
authority would have the power to say whether or 
not certain expenditures ordered by Parliament 
should be carried out and if carried out in what way 
it should be carried out. To this we could not assent. 
We must abide by the existing system which simply 
is that Parliament votes the money and places it in 
the hands of the Government to be expended.^ 

As a final observation regarding the duty of the Audi- 
tor General to prevent the making of improper pay- 
ments, it is to be observed that this authority does not 
extend beyond the raising of legal or technical objections. 

1 Sir Wilfried Laurier — Can. Hansard, 1905, p. 9627. 
- Sir Wilfrid Laurier — Can. Hansard, 1905, p. 9629. 

163 



THE CANADIAN BUDGETARY SYSTEM 

His duties are of an inquisitorial and not of an adminis- 
trative nature. He is merely an officer of verification to 
see that the government appropriations are spent accord- 
ing to the directions of Parliament. It is not his func- 
tion to modify contracts or to prevent wasteful expendi- 
tures. As pointed out by Mr. Gladstone, his duties are 
wholly of a legal and not of a political character. The 
coercive and political side, which appertains to public 
expenditure, is wholly under the control of the House of 
Commons and of the Public Accounts Committee. 

Public Accounts Committee. We have taken pains 
to point out that the function of Parliament, or of any 
fund raising and granting authority, does not cease with 
the appropriation of money for the conduct of the gov- 
ernment. Following the grant it is its duty to assure 
itself that its orders in respect to the expenditure of pub- 
lic funds are in fact faithfully carried out. The require- 
ment of an audit of disbursements and a report of the 
results of such audit constitute but the means through 
which it can perform this function. There still remains 
the necessity that Parliament shall make provision for 
the examination by itself of this report and the taking 
of such action as may be required to correct any abuses 
discovered. 

When the Dominion Plouse of Commons met for the 
first time after the establishment of confederation, it 
appointed among its other select standing committees 
one to review the public accounts. In taking this step 
it was merely imitating an English precedent. But the 
Canadian House did not follow the example of Great 
Britain's lower chamber in regard to the composition of 
this important committee. The English Public Ac- 

164 



AUDIT OF PUBLIC ACCOUNTS 

counts Committee consists of only fifteen members, 
the majority of which, as well as the chairman, are 
chosen from the ranks of the Opposition. This has been 
done on the theory that, as the Opposition have the right 
to investigate government expenditures, it is only proper 
that both the initiation and the control of any proposed 
inquiry into the management of the public finances 
should be in the hands of those opposed to the admin- 
istration. Members of wide financial experience are 
appointed to this committee and its chairman is generally 
an ex-secretary of the English Treasury. 

In Canada, on the other hand, the Dominion Public 
Accounts Committee has had at times over eighty mem- 
bers. The majority of these are always supporters of 
the Government including the chairman, who is never a 
member of the Cabinet. This custom which prevails of 
appointing ministers of the Crown to this committee, has, 
however, been the subject of adverse comment. 

I believe it is a mistake, I believe it is contrary to 
the spirit of the public accounts committee and the 
object for which it is formed, that a large number of 
ministers should have seats there. I admit the wis- 
dom an.d propriety of allowing the ministers to be 
heard before the Public Accounts Committee when the 
expenditures of their several departments are under 
consideration by the committee. That can be done, 
I think, and done in accordance with our rules, but 
I do say that it cannot but strike the public at large 
as a very unfair and a very improper thing that we 
should bring up questions for investigation into the 
spending departments, and that, again and again, 
investigation should be refused by a majority com- 
posed, as I have said, of the chiefs of these very 
spending departments.^ 

1 Sir Richard Cartwright — Can. Hansard, 1894, P- 1878. 

165 



THE CANADIAN BUDGETARY SYSTEM 

That the large membership of the Dominion Public 
Accounts Committee is a drag on its efficiency has been 
frequently conceded. 

It is a working committee and its members are too 
large. We have not had the same members in attend- 
ance de die in diem; and there was no certainty that 
members present one day would be present at the 
next sitting, and that members would keep up a 
continuous attention to the business before the com- 
mittee.' 

In 1883, the experiment was tried of reducing the size 
of the committee. But it was quickly restored to its 
original strength, apparently in order to insure the at- 
tendance of a quorum on all occasions. 

Originally, the committee was concerned with the 
audit of the public accounts. It was relieved of this 
duty, however, in 1878, when the Auditor GeneraFs of- 
fice was established. 

As a committee of inquiry the committee possesses 
very considerable powers. 

Everything between the lids of the Auditor Gen- 
eral's report is referred to the committee. It is the 
right of members there to move that accounts, letters, 
papers, correspondence and vouchers be laid before 
the committee — not copies, but the documents them- 
selves, and we have a right to examine these to our 
hearts' content. And, if we are not satisfied, we have 
the right to ask the committee to subpoena those who 
can give us information concerning the matters in 
question. These may be private citizens; they may 
be officials in the departments; they may be contrac- 
tors or even ministers of the Crown; and when these 
parties come before us we have the right to question 
and cross-question them like witnesses before a court, 

^ Sir John A. Macdonald — Can. Hansard, 1883, p. 37. 

166 



AUDIT OF PUBLIC ACCOUNTS 

and to have the original documents in our hands to 
guide us in that examination. So we have the right 
to make inquiry along these lines: first, by moving 
for documents; second, by examining original docu- 
ments in the departments of the Government; third, 
by asking to have documents submitted to the com- 
mittee on public accounts; and, fourth, by asking to 
have parties brought before that committee for 
examination/ 

Witnesses are summoned at public expense before the 
committee if a member will vouch as to the materiality 
of the evidence they are to give. 

The rule laid down in the public accounts commit- 
tee and the privileges and elections committee and 
every committee on which I have had the honor of 
sitting was that if any gentleman of that committee 
or any member of this House would stake his reputa- 
tion on the belief that a witness was material, that 
witness was called, as a matter of course. And natu- 
rally so. Because any gentleman, any member of that 
committee who took it upon himself without suffi- 
cient cause to ask that a witness be summoned, after 
stating that a witness was material, took his reputa- 
tion in his hands. ^ 

Despite its extensive powers, the fact that the Cana- 
dian Public Accounts Committee is controlled by the 
party in power, and has as its chairman a member of the 
Cabinet whose acts are to be inquired into, has prevented 
it from exercising its functions effectively. An ex- 
amination of its reports and unpublished stenographic 
transcripts of its meetings will sufficiently show that it 
fails to make a full and satisfactory investigation of pub- 
lic expenditures. The inadequate results achieved are 

1 Mr. Sproule — Can Hansard, 1907-08, p. 1783. 

2 Mr. Borden — Can. Hansard, 1902, p. 1411. 

167 



THE CANADIAN BUDGETARY SYSTEM 

seen to be due in part to the interjection of party politics 
into the work of the committee, and in part to the self- 
interest of the majority element. Instead of both sides 
uniting in an effort to investigate thoroughly the public 
accounts so as to disclose all improper expenditures, if 
any, as should be the case, the chief aim of the Opposi- 
tion is to uncover such disbursements as will tend to dis- 
credit the administration, and the object of the chairman 
and majority members is to prevent such disclosures. 
And, in order to avoid embarrassing revelations, the sup- 
porters of the Government limit as far as possible all in- 
quiries started by their opponents. 

The following extracts from the Canadian Hansard 
will serve to illustrate the criticism which members of 
the House have brought against the manner in which 
the Committee of Public Accounts performs its work. 

In Canada, during the present session, at the first 
meeting of the public accounts committee, six mem- 
bers moved for 41 sets of papers. There is no doubt 
whatever that all these papers moved for are de- 
manded for party purposes and in the expectation 
that campaign literature may be derived therefrom. 
Of course, it is needless to say that the six members 
are all opposition members.^ 

The public accounts committee is appointed, in 
theory, to revise the public accounts, to suggest im- 
provements, to correct errors. But anyone who has 
attended the meetings of the public accounts com- 
mittee knows that this is how its machinery works: 
Those who are opposed to the Government go into 
an examination of an account ; they are never assisted 
by the supporters of the Government; but in ninety- 
nine cases out of a hundred they are opposed by the 

1 Report of Commission on the Civil Service, Canadian Sessional 
Papers, Volume XLII, No. 15, p. 23. 

168 



AUDIT OF PUBLIC ACCOUNTS 

supporters of the Government, either by every cir- 
cumstance that can mitigate unfavorable criticism 
being suggested or by obstacles being actually 
thrown in the way to prevent a successful issue of 
the contention of the opposition." 

The whole work of the committee (public accounts) 
seems to be this: One side, the opposition, wants to 
investigate, and the other side wants to obstruct/ 

Let a member of Parliament endeavor to ascertain 
what has been done with the people's money, and the 
very gentlemen who should assist us in doing so take 
no interest or part in it, except to block any investi- 
gation that may be attempted by gentlemen on this 
side of the House.^ 

It is well known that for years the principle has 
been applied, and is daily being applied more fre- 
quently, that the Government majority can control 
what investigations shalfbe held, what evidence shall 
be taken, what questions shall be asked, and what 
answers given, even by witnesses brought down by 
the opposition/ 

I do not think the opposition members want any 
obstruction in the committee; they are at work from 
the very start of any inquiry to the end, but from the 
other side there is a fire of objections. * * ^ If the 
honorable member for East Grey (Mr. Sproule) asks 
a question and does not put it in proper legal form 
and with the precision laid down in the law books, 
some young gentleman of the legal profession jumps 
up and tells him he is out of order. ^^ * * q^^g 
chairman agrees because as he tells us he has to carry 
on the proceedings as nearly as possible Hke those of 
a court of law.^ 

1 Mr. Fraser — Can. Hansard, 1902, p. 1894. 

2 Mr. Barker — Can. Hansard, 1906-07, p. 5853. 

^ Mr. Northrup — Can. Hansard, 1906-07, p. 5837. 
* Mr. Northrup — Can. Hansard, 1906-07, p. 5836. 
^ Mr. Barker — Can. Hansard, 1906-07, p. 5852. 

169 



THE CANADIAN BUDGETARY SYSTEM 

The usual custom in the public accounts committee 
is for ministers of the Crown to attend that commit- 
tee, and whenever a witness is called to give evidence 
which they fear, they are the first to say to the 
witness: It is not necessary for you to answer that 
question/ 

When we go to the public accounts committee and 
summon parties before us, and have them sv/orn to 
tell the truth and when we put a question, some 
member of the Government says : Don't answer that 
question. Then we appeal to the chairman of the 
committee to know if the witness is not obliged to 
answer the question, and he says: No, he need not 
answer it if he does not vv^ish. Then we appeal to 
the committee over the head of the chairman, and by 
a partisan majority the committee votes almost every 
time to sustain the ruling of the chair. ^ 

It is laid down unmistakabty that the public 
accounts committee has the right to summon any 
witness required to give information with regard to 
any item under consideration. Then when we brought 
witnesses before the committee and asked questions 
designed to bring out information which we deemed 
it to be in the public interest to make known, they 
told the witnesses that they need not answer the 
question. Is this the duty of a member of the com- 
mittee? He abandons his place and becomes a coun- 
sel for the witness rather than a member of the 
committee.^ 

They (witnesses) appear before the committee; the 
important question is asked and there is an absolute 
refusal to answer. The chairman is again appealed 
to. He sustains the witness in his refusal. The com- 
mittee is again appealed to, to do what? Order the 
witness to answer? No, but simply to report the 

1 Mr. Ingram — Can. Hansard, 1904, p. 1945. 

2 Mr. Sproule — Can. Hansard, 1907-08, p. 1785. 
^ Mr. Sproule — Can. Hansard, 1902, p. 3260. 

170 



AUDIT OF PUBLIC ACCOUNTS 

matter to this House that we may find out on the 
floor of Parliament whether the question is germane 
and ought to be answered. That obedient chairman 
and that obedient majority of the committee refused 
to allow the evidence to be reported to this House/ 
Time and time again, when questions have been 
asked in that committee (on Public Accounts) with 
regard to public expenditure, the chairman, without 
waiting for objection to be raised, tells the witness 
that he has no right to answer the question. It is 
for the committee to decide whether the question 
should be answered or not. But the chairman does 
not wait for any objection from members of the com- 
mittee. He even goes so far as to say, before a 
witness is brought in, he will not allow him to 
answer. Is that partisanship or is it not? I say that 
the arm of parliament is paralyzed in that committee, 
and the representatives of the people cannot do their 
duty; they cannot get the information they ought to 
have to lay before this House that the public may be 
able to judge whether there has been a proper expen- 
diture of public money or not." ■ 

When in a majority either political party is equally 
ready to obstruct the inquiry. 

If there was one line of demarcation, w^hich in 
former days was more distinct than another between 
the two parties, it was the fidelity with which the 
Reform (Liberal) party claimed to represent the 
people and sought to wrest from the Crown the con- 
trol of the people's money because the people con- 
tribute it. Where is the Reform party today? The 
people still contribute the money, but the Reform 
party today, is the party which declines to allow the 
representatives of the people to investigate and ascer- 

1 Mr. Foster — Can. Hansard, 1906, p. 3633. 

2 Mr. Sproule — Can. Hansard, 1906-07, p. 5794. 

171 



THE CANADIAN BUDGETARY SYSTEM 

tain how that money has been spent and who 
received it/ 

When the report of the (PubHc Accounts) com- 
mittee, based on insufficient evidence, was brought 
before this House, this House solemnly voted that it 
was absolutely correct. A report which stated that 
all the evidence offered had been taken, when every 
man in the House knew that the committee had 
steadily refused to admit the evidence, was accepted 
by this House as a complete and impartial report. 
* "^ * Is it any wonder, when such a policy is 
followed, that our expenditures should have increased 
from $40,000,000 to over $100,000,000? Is it any 
wonder that we should find ministers recreant to their 
duty and allowing contractors, middlemen and others 
to mulct this country in most extravagant sums and 
deputy heads vouching for these expenditures, when 
we find committee after committee of investigation 
persistently refusing to have any light thrown upon 
their transactions, and this House endorsing them in 
their efforts to block legitimate inquiry ? ^ 

This plain subversion of the original intent and pur- 
pose of a public accounts committee explains the com- 
parative infrequency with which the committee meets. 
Sessions of the committee are held only when some mem- 
ber desires to bring some particular matter to its atten- 
tion. 

The practice has been that the public accounts 
committee is not called together until some member 
brings a matter before the committee.^ 

If this session lasts to the first of July, we will have 
fourteen to say twenty meetings of the public ac- 
counts committee. That, at the rate of two hours 
per day, means forty hours, but half of the time is 

1 Mr. Northrup — Can. Hansard, 1906-07, p. 5836. 
3 Mr. Northrup — Can. Hansard, 1907-08, p. 5839. 
^ Mr. Middleboro — Can. Hansard, 1916, p. 842. 

172 



AUDIT OF PUBLIC ACCOUNTS 

taken up at each meeting by members on the liberal 
side who talk so much that it is impossible to get 
down to the facts that the committee is endeavoring 
to investigate. That will leave twenty hours to 
investigate the whole of the departments of the 
Government/ 

This (public accounts) committee is one which it 
is not convenient to call together very often. We 
have now been five weeks in session, and we have 
not yet examined a single witness. * * * As a rule 
the committee is hardly called together more than 
once a week; it is with very great difficulty indeed 
that w^e have ever succeeded in getting it called 
together twice a v/eek. We do not know how many 
weeks it may be our fate to spend here, but at the 
average rate of proceeding we would not be able to 
have more than seventeen or eighteen meetings, and 
it is very doubtful if we v/ould succeed in getting this 
number.^ 

As a considerable part of its sessions is usually taken 
up with unprofitable wrangling and full investigation is 
more or less obstructed, the Dominion PubHc Accounts 
Committee rarely if ever reports positive conclusions 
concerning any matter. It contents itself with simply 
reporting the testimony taken before it to the House of 
Commons without any recommendations. 

Notwithstanding its defects, however, it is generally 
admitted, even by its critics, that the Committee on Pub- 
lic Accounts is of great value. The mere fact that any 
item of expenditure may thus be brought up for hostile 
examination and criticism, and the evidence regarding 
it made public, cannot but have a very considerable value 
in restraining the Government or particular officials 

^ Mr. J. D. Reid — Can. Hansard, 1905, p. 3663. 

2 Sir Richard Cartwright — Can. Hansard, 1894, p. 1706. 

173 



THE CANADIAN BUDGETARY SYSTEM 

from authorizing or permitting improper expenditures. 
These investigations of the committee might be made 
more thorough and less tinged with poHtical partisan- 
ship, but, such as they are, they constitute a valuable and 
indispensable link in the parliamentary control of the 
public purse. In this connection it will be pertinent to 
quote the words of Durell in his recent work on Parlia- 
mentary Grants, with reference to the influence of the 
Public Accounts Committee of the British House of 
Commons/ He says : 

The admitted influence of the Committee and the 
important position it has obtained form therefore a 
striking commentary on the Vv^ay in which it has per- 
formed its work during the past half century, achiev- 
ing its results in spite of the absence of direct powers 
of enforcing its reports or recommendations. It has 
no power, even after the most minute examination 
and on the clearest evidence, to disallow any item. 
It can only call attention to it, and express its opinion 
that it should be disallowed. It has been stated, 
indeed, that nothing has a greater deterrent effect on 
a department than the fear of having to go before the 
Public Accounts Committee, and that the accounting 
department stands more in awe of this Committee 
than of the House of Commons itself, probably be- 
cause there is less chance of escaping its close scru- 
tiny. The Chairman of the Committee expressed the 
same opinion to the House. ''There is," he said, "b, 
great deal of human nature in the world, and fear is 
one of the greatest helps in keeping men straight. 
The fear of the Public Accounts Committee, and the 
very searching examination that takes place there, 
does a great deal to keep in the path of rectitude the 
members of the civil service." 

^ The Principles and Practice of the System of Control over Parlia- 
mentary Grants, p. 112. 

174 



AUDIT OF PUBLIC ACCOUNTS 

As has been pointed out, the PubHc Accounts Com- 
mittee of the Canadian House of Commons has not 
proved as efficient an organ of control as has its British 
prototype, but there can be no question but that what 
Durell has to say of the latter has, none the less, a con- 
siderable application to the former. 

It should be borne in mind, however, that whatever 
changes may be made in the direction of increasing the 
efficiency of the Public Accounts Committee, economy 
can better be enforced by stopping useless expenditures 
beforehand than by having the committee bring the facts 
in regard to them to light after they have been made. 

In this view, closer attention by Parliament to the 
Estimates is greatly to be desired. As was recently re- 
marked : 

Is there a better way, after ail, to stay improper 
expenditure than to stop the sources of its origin? 
The Estimates of the Canadian Parliament is the 
book to read and to revise, if we want to bring about 
reforms in public expenditures, the reduction of 
patronage evils and generally political andxommer- 
cial corruption; for political life is not alone in need 
of regeneration in Canada.^ 

1 Mr. A. K. Maclean — Can. Hansard, 1916, p. 936. 



175 



CHAPTER XI 
THE SYSTEM OF FINANCIAL REPORTS 

For information regarding the national finances the 
ParHament and people of Canada have available the 
data contained in four annual publications: the "Esti- 
mates," 'Tublic Accounts for the Fiscal Year/' ''Report 
of the Auditor General for the Fiscal Year," and 
''Budget Speech of the Minister of Finance." 

The Estimates. The character of the data con- 
tained in the Estimates has already been described and 
illustrated by the reproduction of typical tables. It is 
sufficient here to say, therefore, that the estimates proper 
are shown in comparison with the estimates for the pre- 
ceding year. The comparison thus made is of interest 
and importance. It should be noted, however, that the 
showing is one purely of estimates and appropriations 
and not of actual expenditures. The book of Estimates, 
furthermore, contains nothing in the way of a statement 
of revenues or of resources and liabilities. It thus has 
in no sense the character of a budget in the proper ac- 
ceptation of that term. 

Public Accounts for the Fiscal Year. The Public 
Accounts for the Fiscal Year is an annual report made 
by the Minister of Finance in accordance with the fol- 
lowing provisions of the Consolidated Revenue and 
Audit Act : 

An annual statement shall be prepared as soon as 
possible after the termination of each fiscal year 
exhibiting — 

(a) the state of the public debt and the amount 

176 



SYSTEM OF FINANCIAL REPORTS 

chargeable against each of the public works for which 
any part of the debt has been contracted; 

(b) the state of the Consolidated Revenue Fund 
and the various trusts and special funds under the 
management of the Government of Canada; 

(c) such other accounts and matters as are re- 
quired to show what the liabilities and assets of 
Canada really are at the date of such statement. 

The Minister of Finance shall cause an account to 
be prepared and submitted to the Auditor General on 
or before the thirtieth day of June in every year show- 
ing the issues made from the Consolidated Revenue 
Fund in the fiscal year ended on the thirty-first day 
of March preceding for services directly under his 
control. 

Such accounts and the. reports of the Auditor 
General thereon shall be laid before the House of 
Commons by the Minister of Finance on or before 
the thirty-first day of October next following, if 
Parliament is then sitting, or, if not sitting, then 
within one week after Parliament is next assembled. 

The Deputy Minister of Finance shall prepare and 
submit to the Minister of Finance the public accounts 
to be annually laid before Parliament. 

The reports called for by the foregoing provisions are 
laid before the House of Commons in a single volume 
entitled "Canada — Public Accounts for the Fiscal Year 
Ended March 31, ." This report, which corre- 
sponds to the ''Finance Report" of the British govern- 
ment, contains an exceptionally complete, compact and 
clearly presented exposition of the condition of the 
treasury at the date of its rendition and of the financial 
operations of the year just ended. ^ 

The following table of contents, taken from the re- 

1 The report for 1916 consisted ef a compact octavo volume of 
268 pages. 



THE CANADIAN BUDGETARY SYSTEM 

port for the year 1916, will show the general scope and 
character of information furnished by this volume. 

TABLE OF CONTENTS 
Report of the Deputy Minister of Finance 

Ordinary Receipts and Payments 

Capital and Special Expenditures 

Savings Banks 

Investments 

Debt 

Loans 

War Account Expenditures by Departments 

War Account Expenditures by Militia Department 

Railway Securities Guaranteed by the Dominion 

Dominion Notes 

Statement of Account — Grand Trunk Pacific Railway 
Company 

Statement of Account — Canadian Northern Railway 
Company 

Statement of Account — Canadian Northern Ontario 
Railway Company 

Statement of Account — Canadian Northern Alberta 
Railway Company 

Statement of Account — Decayed Pilots Funds 

Number of Officials, etc., under Superannuation and 
Retirement Acts. 

Dominion Note Circulation 

Dominion Notes Issued and Redeemed and in Circula- 
tion 

Dominion Notes Issued to Assistant Receiver General 

Dominion Notes Withdrawn from Circulation and De- 
stroyed 

178 



SYSTEAI OF FINANCIAL REPORTS 

Dominion Notes, Circulation from March 31, 1882 to 

March 31, 1916 
Canadian Gold Coin Issued by the Mint to March 31, 

1916 
Silver and Bronze Coinage for Canada from 1858 to 

1916 
Deportation of American Coinage from April i, 19 10 to 

March 31, 1916 
Silver Recoinage Statement 
Copper Recoinage Statement 

PART I 

Balance Sheet 

Receipts and Payments 

Miscellaneous Statements 

Balance Sheet, Dominion of Canada, March 31, 19 16 

Statement of Receipts and Payments of Canada Fiscal 

Year, 1916 
Statement of Consolidated Fund March 31, 19 16 
Cash Account Fiscal Year 19 16 
Funded Debt Payable in London, March 31, 19 16 
Funded Debt Payable in Canada, March 31, 19 16 
Sinking Fund of Canada, March 31, 19 16 
Loans Authorized and Redeemed, March 31, 1916 
Summary Statement of Revenue and Expenditures, 

1867 to 1916 
Debt of Canada from July i, 1867 to March 31, 1916 
Receipts and Expenditures on Account of Consolidated 

Fund, 1868 to 19 1 6 
Summary of Liabilities, 1867 to 19 16 
Summary of Assets, 1867 to 19 16 
Detailed Liabilities, 1867 to 19 16 

179 



TPIE CANADIAN BUDGETARY SYSTEM 

Detailed Assets, 1867 to 1916 

Receipts from Consolidated Fund, 1867 to 191 6 

Expenditures on Account of Consolidated Fund, 1867 
to 1916 

Debt of Canada Payable in London according to Rate 
of Interest, 1867 to 1916 

Liabilities and Assets of Canada according to Rate of 
Interest, 1867 to 1916 

Expenditure on Capital Accounts, Canadian Pacific 
Railway, Debts Allowed to the Provinces and North- 
western Territories Expenditures 

Statement Accounting for Increase of Debt, 1867 to 
1916 

Statement of Business of Post Office Savings Bank, 
1867 to 1916 

Statement of Balance at Credit of Depositors in Domin- 
ion Government Savings Banks, March 31, 1916 

Recapitulation of Yearly Transactions of Savings 
Banks, 1867 to 1916 

Savings Banks: General Recapitulation, 1867 to 1916 

Comparative Statement of Finance Department, 1867 
to 1916 

Issue and Redemption of Dominion Notes, July i, 1878 
to March 31, 1916 

Total Amount Paid to Each Railway on Account of 
Railway Subsidies, 1884 to 1916 

PART II 

Revenue Statements 
Comparative Statement of Revenue by Services, 191 5 

and 1916 
Customs Revenue, Expenses of Collection, etc., 191 6 
Fines and Forfeitures including Seizures, 191 6 

180 



SYSTEM OF FINANCIAL REPORTS 

Premiums, Discount and Exchange Revenues, 19 16 

Interest on Investments, 19 16 

Casual Revenue, 191 6 

Receipts on Account of Superannuation, 19 16 

PART III 
Expenditure Statements 

Interest on Public Debt, 19 16 

Sinking Funds, 19 16 

Charges of Management, 191 6 

Redemption of Debt, 19 16 

Premiums, Discount and Exchange Expenditure, 19 16 

Superannuation Payments, 191 6 

Expenditures by Services, 1916 

Intercolonial Railway, Revenue and Working Expenses, 
1916 

Prince Edward Island Railway, Revenue and Working 
Expenses, 191 6 

National Transcontinental Railway, Revenue and 
Working Expenses, 191 6 

Saint Johns and Quebec Railway, Revenue and Work- 
ing Expenses, 1916 

International Railway of New Brunswick, Revenue and 
Working Expenses, 191 6 

New Brunswick and Prince Edward Island Railway, 
Revenue and Working Expenses, 191 6 

Indian Fund, 19 16 

Province Accounts, 191 6 

Provincial Subsidy Accounts, 1916 

The first point to strike the attention of the person in- 
terested in the finances of the Dominion is the care taken 
to show the financial resources and obligations of the 

181 



THE CANADIAN BUDGETARY SYSTEM 

Dominion by means of a general balance sheet and sum- 
mary, and detailed statements of treasury assets and 
liabilities. In these statements no attempt is made to 
list and value all public property but only that which 
may be termed a treasury asset in that it consists of 
cash, securities, or public works, the product of capital 
outlays. 

A second feature of im.portance is the detail with 
which the revenues and expenditures of the Dominion 
are shown. 

Finally, the report has the great value of giving all 
the more important summaries in the form of tables 
showing the figures for each year since the establish- 
ment of the Dominion in 1867. It is thus possible to 
determine not only treasury conditions and operations 
for the year just closed, but those conditions and opera- 
tions in comparison with the corresponding figures for 
prior years. 

Report of the Auditor General for the Fiscal Year. 

In addition to the report of Public Accounts which, 
though in large part prepared by the Auditor General, 
is submitted to Parliam.ent by the Minister of Finance, 
the Auditor General is required by the following pro- 
vision of the Consolidated Revenue and Audit Act to 
submit directly to the House of Commons a certified re- 
port upon the state of the several appropriation accounts : 

On or before the thirtieth day of June in every year, 
accounts of the appropriation of the several supply 
grants comprised in the Appropriation Act, or in any 
other Act, for the year ending thirty-first March then 
last, shall be prepared by the several departments and 
be transmitted for examination to the Auditor Gen- 
eral and to the Deputy Minister of Finance, and, 

182 



SYSTEM OF FINANCIAL REPORTS 

when certified and reported upon, as hereinafter 
directed, they shall be laid before the House of Com- 
mons; and such accounts shall be called the appro- 
priation accounts of the moneys expended for the 
services to which they respectively relate. 

The nature of the appropriation accounts submitted in 
accordance with this provision may be seen from the fol- 
lowing extracts from the Report of the Auditor General 
for 19 1 6. First is presented a summary of the appro- 
priation accounts under two heads, relating respectively 
to appropriations under the regular supply bill and to 
those under permanent or special statutes. They are as 
follows : 



183 



THE CANADIAN BUDGETARY SYSTEM 



SUMMARY OF GRANT AND EXPENDITURE UNDER SUPPLY BILL. 1915-16 



SERVICE 



Page 



Grant 



Expenditure 



Grant 
Not Used 



Grant 
Exceeded 



-Con. 



Administration of Justice 

Adulteration of Food. . . , 

Arts and Agriculture. . . . 

Charges of Management. 

Civil Government — Sala- 
ries 

Civil Government 
tingencies 

Customs 

Dominion Lands and Parks 

Dominion Police 

Excise 

Fisheries 

Government of Northwest 
Territories 

Government of Yukon Ter- 
ritory 

Immigration 

Indians 

Labour 

Legislation 

Lighthouse and Coast Ser 
vice 

Marine Hospitals 

Mail Subsidies and Steam- 
ship Subventions, 

Militia and Defense. . 

Mines and Geological Sur- 
vey 

Miscellaneous 

Naval Service 

Ocean and River Service . . 

Penitentiaries 

Pensions 

Post Office 

Public Works — Capital . . . 

Public Works — Capital 
(Marine) 

Public Works Consolidated 
Fund 

Public Works — Collection 
of Revenue 

Quarantine 

Railways and Canals — 
Capital 

Railways and Canals — 
Con. Fund 

Railways and Canals — 
Coll. of Rev 

Royal Northwest Mounted 
Police 

Scientific Institutions 

Steamboat Inspection. . . . 

Trade and Commerce 

Weights and Measures, 
Gas and Electric Light 
Inspection 



L- 
1-2 
A- 
F 



D 

K-2 
L- 
1-2 
0-2 

K-2 

K-2 
K-2 
H-2 

M-2 
N-2 

0-2 
0-2 

Z-2 
P-2 

Q-2 



R-2 
0-2 
L-2 



S-2 
V-2 

0-4 

V-4 

V-4 
A-2 

W-5 

W-5 

W-5 

X-2 
0-2 
0-2 
Z-2 

1-2 



$ cts 

90,933 34 

53.000 00 

3,308,000 00 

508,950 00 

5,672,118 75 

1,140,138 00 
4,215,000 00 
3,732,566 33 
128,765 00 
1,167,425 00 
1,405,500 00 

8,000 00 

353,000 00 

1,875,000 00 

2,058,638 00 

73,000 00 

1,056,986 50 

2,431.115 00 
78,000 00 

2,641,234 00 
6,039,650 00 

548,525 80 

797,950 00 

2,390,400 00 

1,256,982 98 

979,700 00 

2,108,069 57 

16,678,527 89 

10,334,200 00 

2,498,000 00 

23,308,483 99 



956 

248, 

33.337^ 

876, 

17,128, 

1,403, 

483, 

83, 

3,957, 



500 00 
000 00 

275 00 

397 33 

900 00 

691 00 
873 00 
265 00 
495 33 



$ cts 

75,122 33 

44,721 51 

2,567,023 32 

434,991 87 

5,205,545 90 

946,244 07 
3,685,399 40 
3.418,297 80 
116,664 54 
897,671 34 
956,562 24 

5,232 08 

344,575 39 

1,307,480 46 

1,980,784 48 

56,741 58 

913,606 48 



376.950 00 



1,937,759 08 
66,740 80 

1,680,088 04 
4,663,052 87 

462,787 33 

691,225 36 

1,154,426 27 

\, 213,917 52 

903,318 11 

336,331 83 

16,009,138 77 

6,512,217 97 

1,937,090 48 

12,005,645 24 

857,877 09 
203,308 69 

26,381,116 78 

622,090 43 

16,472,085 84 

1,395,022 45 

463,494 42 

64,884 01 

1,906,150 43 



305,215 24 



% cts. 
15,811 01 

8,278 49 

740,976 68 

73,958 13 

466,572 85 

193,893 93 
529.600 00 
314,268 53 
12,100 46 
269,753 66 
448,937 76 

2,854 92 

8,424 61 

567,519 54 

77,991 70 

16.258 42 
143,915 29 

493,355 92 

11.259 20 

961,145 96 
1,391,649 83 

85,738 47 

106,832 28 

1,235,973 73 

43,065 49 

104,478 78 

1,771,737 74 

669,389 12 

3,821,982 03 

560,909 52 

11,302,838 75 

98,765 22 
44,691 31 

6,980,858 19 

254,306 90 

656.814 16 

8,668 55 

20,378 58 

18,380 99 

2,051,344 90 

71.734 76 



28 



87 00 



138 18 
535 27 



052 70 
107 64 
096 89 



24 



142 31 
,699 97 



Advances io be Repaid 
(See Note on page b-14.) 

Voted under Immigration,, 
and charged to open 
account 



157.790,206 81 



2,963,000 00 



121,201,649 84 



36,657,416 96 



2,963,000 00 



68.859 99 



160,753,206 81 121,201,649 84 



39,620,416 96 



68,859 99 



184 



SYSTEM OF FINANCIAL REPORTS 



SUMMARY OF EXPENDITURE UNDER SPECIAL STATUTES 



SERVICE 


Page 


Expenditure 


Administration of Justice 


L-2 
A-2 
F-2 
F-2 


$ cts. 
1,402 116 10 




885,130 44 


Charges of Management (Administration of the Currency Act) .... 
Charges of Management Loan Account. 


535 41 
3 160 556 55 




257,066 66 


Fishing Bounty 


0-2 

H-2 
F-2 
N-2 
Z-2 
P-2 


158 741 OS 


Indians 


209,549 00 


Interest on Public Debt. . 


^1 421 584 86 


Legislation 


266,756 78 




88,669 23 


Militia and Defence 


18,450 12 


Miscellaneous. 


462 668 75 


Pensions 




334,801 42 


Premium Discount and Exchange. 


F-2 
V-2 
V-4 
V-4 
W-5 


296 308 70 




21,920 46 


Public Works — Income — Exchequer Court Awards 


9.397 86 


Public Works — Income — Collingwood Dry Dock 


24,208 96 


Railways and Canals — Caoital .... 


3,354 499 12 




360,105 69 


Railways and Canals — Income. . . 


W-5 
W-5 
W-5 
F-2 
F-2 
F-2 
Z-2 
Vol. IV. 


96 579 99 




4,305,743 84 


Railway Subsidies. . . 


1 400 171 42 




11,451,673 28 




1,773,021 11 




454,342 04 




109,236 68 


War Account (a) .... 


166,197,755 47 






Recapitulation 
Expenditure under Supply Bill , 


218.521.590 99 

121.201,649 84 






218.521,590 99 










339.723,240 83 



(a) Grant 5 Geo. V. chap. 23, $100,000,000.00: overdraft. $66,197,755.47; overdraft in 
1914-15. see Auditor General's Report, page b-3, $10,750,476.01. Over-expenditure in each 
case covered by 6-7 Geo. V., chap. 28. 



The special statutes referred to in the foregoing sum- 
mary are, with. one exception, more or less permanent 
provisions fixing salaries, charges and other items, the 
expenditure of which is mandatory. These statutes are 
not, therefore, properly appropriation acts; nor are the 
summary of expenditures under them and its supporting 
statements properly appropriation accounts. This is 
clearly indicated by the form in which they are pre- 
sented, merely that of expenditure summaries, without 
any of the information as to grants which is given in 



THE CANADIAN BUDGETARY SYSTEM 

the accounts of expenditures under the supply bill. 
They are presented with the appropriation accounts 
merely for the sake of completeness. 

An exception to this statement is, however, found in 
the last item of the summary of expenditures under 
special statutes, the ''War Account," which embraces 
over $166,000,000 of the $218,000,000 so expended 
The special character of this account, as a true appro- 
priation account, is recognized in the table by the foot- 
note appended to it, showing the excess of the expendi- 
ture over the appropriation. 

The form of presentation of the certified appropria- 
tion accounts proper is illustrated by the subjoined table. 
It will be observed that the grouping, the order and the 
wording of the items in the appropriation accounts are 
those employed in the Estimates and in the appropriation 
act, although the vote numbers found in those documents 
are not reproduced. The addition to each account 
proper of a statement of statutory expenditures under 
the same head has already been referred to. 



186 



SYSTEM OF FINANCIAL REPORTS 



APPROPRIATION ACCOUNT— LEGISLATION 



Grant 



Expenditure 



Grant 
Not Used 



Grant 
Exceeded 



Senate — 

Salaries and Contingencies 

House of Commons — 

Salary of Deputy Speaker 

Salaries of officers 

Expenses of committees, etc 

Contingencies 

Debates 

Sergeant at Arms — Estimates of 

For payment of full sessional indem- 
nity of members — days lost 
through absence caused by illness 
Library of Parliament— 

Salaries 

Books for general library 

Books for Library of American History 

Contingencies 

General — 

Printing, printing paper and binding . . 

♦Printing, binding and distributing 
the Annual Statutes 

Contingent expenses in connection 
with voter's list 

Contingencies of the Clerk of the 
Crown in Chancer^' 

Provincial voters' lists 



$ cts. 

114.716 50 

2.000 00 
207,587 50 
99,700 00 
51,550 00 
60,000 00 
78.312 50 

19.000 00 

31,550 00 

16.000 00 

1.000 00 

13.070 00 

300.000 00 

10,000 00 

33,000 00 

5,000 00 
14,500 00 



$ cts. 

104.811 55 

2,000 00 

199,007 86 

34.382 11 

44,973 75 

59,035 46 

52.141 25 

(a) 

29.756 16 

16.457 47 

849 74 

8,172 60 

300,077 80 

9,921 59 

32,962 93 

4,977 70 
14,078 51 



$ cts. 
9,904 95 



cts. 



8,579 64 
65.317 89 

6.576 25 

964 54 

26.171 25 



19.000 00 
1,793 84 



150 26 

4,897 40 



457 47 



77 80 



78 41 
37 07 



22 30 
421 49 



,056,986 50 



Under Statute 

Senate — 

Salary of the Speaker 

Indemnity and travelling expenses. 
House of Commons — 

Salary of Speaker 

Indemnity and travelling expenses . 
General — 

Elections 

Controverted elections 



913,606 48 



4,000 00 
56,500 20 



3,574 42 
174,838 40 



27,819 76 
24 00 



143.915 29 



535 27 



Summary 



Under Supply Bill . 
Under Statutes . . . 



1,056.986 50 



266,756 78 



913,606 48 
266,756 78 



,056,986 50 



,180,363 26 



(o) Expenditure includes with Indemnity — Under Statute. 
These accounts have been examined under my direction, and are correct. 

J. Eraser, 
Auditor General, 
Exammed, 

E. E. Stockton. 
J. W. Reid. 



187 



THE CANADIAN BUDGETARY SYSTEM 

The statute requires the departments to submit to the 
Auditor General in connection with their appropriation 
accounts, "a balance sheet so prepared as to show the 
debit and credit balances in the ledger of such depart* 
ment on the day when the said appropriation account 
was closed, and also so prepared as to verify the bal- 
ances appearing upon the annual appropriation account;" 
and "an explanation showing how the balances on the 
grant included in the previous report have been ad- 
justed, and ... an explanatory statement of any ex- 
cess of expenditure over the grants included in the ac- 
count." These accompanying statements are not, how- 
ever, required by the statute to be transmitted to Parlia- 
ment, and therefore they do not appear in the report of 
the Auditor General. 

In view of the failure of the report to exhibit these 
statements which, while not required by the statute to 
be transmitted to Parliament, are yet so highly pertinent 
to the appropriation accounts, it is the more noteworthy 
that there are appended to the report proper — the appro- 
priation accounts — extensive and detailed statements of 
revenue and expenditure. 

The English audit, and what was formerly the 
Auditor General's audit, would simply give a state- 
ment of the salaries or disbursements, state what 
amount over or what amount under the grant, and 
if at any time he found that there was a theft of money 
or any wrong in any way, he would simply make a 
note of it and call the attention of the House to it. 
But this report goes very much further. It is a dis- 
play of items which have nothing to do with an audit. ^ 

When the Auditor General started he started on 
the English system and his reports w^ere in that form. 

1 Mr. Foster — Can. Hansard, 1895, p. 2434. 

188 



SYSTEM OF FINANCIAL REPORTS 

Let any honorable gentleman take the report for 
1879, and a number of succeeding years, and read 
them, and he will see the English system copied 
exactly. In those days when he came to any depart- 
ment, he simply stated the nature of the expenditure, 
how much less than granted, or how much more than 
granted, and, if everything was in proper form, gave 
his certificate. If there w^as anything wrong with 
the account, he made a note of it. I have here the 
audit for the British Parliament for 1891 and 1892. 
Take, for instance, the expenditure on royal parks 
and gardens. You have a statement of the salaries, 
the grant that was made, what was spent less than 
was granted, or what was spent more than was 
granted, under the different items, and the certificate 
of the Auditor General to that effect. But when we 
take the report of the Auditor General of the Domin- 
ion for 1894, or any other of his reports of late years, 
we find that it is much more than an audit; it is a 
display of every item of expenditure and revenue 
down to its minutest detail, so far as his staff have 
the time to gather it up.^ 

The characterization just quoted is indeed borne out 
by the report of the x\uditor General for 191 5-16. The 
appropriation accounts comprise but fifty-four of the 
well-nigh 1500 pages of the report. With minor ex- 
ceptions ^ the remaining pages are taken up with state- 
ments of revenue and expenditure in which the trans- 
actions of the several departments are presented with a 
degree of itemization seldom found in documents deal- 
ing with national finances. Both revenue and expendi- 

' Mr. Foster — Can. Hansard, 1895, p. 2433. 

2 The report also contains a reproduction of certain correspondence 
between the Auditor General and other officers of the government 
relative to certain disputed contract payments; a set of miscellaneous 
tables showing advertising, printing, and legal expenses; a summary 
of departmental salaries at Ottawa, and a statement of arrears due 
the government from various sources. 

189 



THE CANADIAN BUDGETARY SYSTEM 

ture reports are first presented in summarized form and 
are then supported by detailed tables. The form of 
these summar}^ and detailed statements has so direct a 
bearing on one of the main problems of the present 
study — that of determining the extent to which the sys- 
tem of accounting and reporting gets before ParHament 
and the people the information needed by them for the 
proper consideration of those finances — that we have 
thought it warrantable to describe them at some length 
and to reproduce the summaries in full. ' 

Both revenue and expenditure summaries are classi- 
fied by ''services," ^ and by departments. The revenue 
summaries show only the revenue accruing to the Con- 
solidated Fund. They are as follows : 



1 For greater clarity in the present discussion of these summaries, 
the order of their presentation in the report is departed from, and their 
captions are in some cases modified. 

2 The term "services," as used in connection with revenues in the 
report, has a meaning different from that attaching to it in connection 
with appropriations and expenditures. (See p. 89.) It refers to a 
source of revenue which may or may not be coincident with a single 
"service." 

190 



SYSTEM OF FINANCIAL REPORTS 



SUMMARY OF CONSOLIDATED FUND REVENUE BY SERVICES 



1914-15 



$ 

19, 

427, 

1.602. 

294. 

9, 

3. 

75.941, 

2,859, 

35, 

82, 

21,382, 

49, 

92, 

8, 

56, 

45, 

517, 

2.980, 

9, 



72. 
96. 
56, 
40, 
27, 
4, 
219. 



13.046 
268 



376. 
,444, 
415, 

23, 
153, 

21. 

65, 

25, 
5, 

5, 
37, 
98, 



cts. 
443 49 
763 14 
619 27 
490 17 
973 00 

114 54 
219 72 
714 59 
579 38 
440 20 
643 38 
983 12 
636 12 
757 02 
878 75 
841 30 
561 77 
034 63 
246 87 
788 25 
676 00 

524 89 
747 67 
596 07 
282 36 
281 68 
409 64 
Oil 49 

546 67 
664 68 
572 33 

366 72 
,873 14 
,495 44 

169 22 
,213 55 

717 24 

,468 92 

,419 81 
,262 71 

,707 38 
,366 22 
,056 95 



103,322 24 



133.073.481 73 



SERVICE 



Canada Gazette 

Canals 

Casual Revenue 

Chinese Immigration 

Civil Service Examination 
fees 

Cullers' Fees 

Customs 

Dominion Lands 

Dominion Steamers 

Electric Light Inspection . 

Exchequer Court Reports. 

Excise 

Fines and forfeitui>es 

Fisheries 

Fisheries — Modus vivendi 

Gas inspection 

InsuranceSuperintendence 

Inspection of Staples 

Interest on Investments. . 

Law Stamps. . 

Lighthouse and Coast Ser- 
vice 

Mariners' Fund 

Methylated Spirits 

Militia 

Military College 

Militia Pensions 

Ordnance Lands 

Patent Fees and Trade 
Marks 

Penitentiaries 

Post Office 

Premium Discount and 
Exchange 

Public Works 

Railway — Intercolonial. . . 

Railway — Prince Edward 
Island 

Railway — Windsor Branch 

Railway — Transconti- 
nental 

Railway — St. John and 
Quebec 

Railway — International 
of N. B 

Railway— N. B. & P. E. I . 
R. N. W. M. Police Pen- 
sions 

Steamboat Inspection .... 

Superannuation 

War Tax — Inland Revenue 

Vv'^arTax — Finance. . . . 

Weights and Measures. 



Part 



1915-16 



$ cts. 

29.863 38 

446.722 21 

1,328.124 09 

Dr. 31.713 75 



10. 

1. 

98 , 649 , 

2,299, 

35, 

70, 

22,316, 
81, 
96, 

9, 

46, 

52, 

913, 

3,358, 



241 50 
737 07 
409 48 
550 47 
070 88 
451 75 
140 68 
645 23 
691 33 
376 26 
912 00 
031 80 
951 27 
616 46 
210 13 
520 15 



643 00 

72,545 65 

111,846 35 

192,299 61 

35,142 19 

23,512 99 

5,977 02 

230,191 95 

43,164 82 

18.858,690 10 

233,717 87 

411,787 29 

14,068,791 41 

390,926 82 



3,758,387 39 

54,765 20 

104,623 49 
50,414 34 



5,330 36 

5,092 12 

31,796 94 

,536,837 94 

,0.83,943 78 

110,857 25 



172,147,838 27 



Increase 



Dr. 



$ cts. 
10.419 89 
18,959 07 



268 50 
22 i 708! 189" 76 



933,662 11 

32,055 21 

3,619 24 

1.033 25 



7,389 50 
396,581 83 
377,963 26 

1,731 90 



274,495 18 
326.203 92 



1,377 47 

560,160 12 

508 50 

11.988 45 

502 70 



10.809 50 



20 76 

15.098 68 

135,703 54 



1,567 38 
11.180 46 

5;812;025'42 



35,420 57 
2,511,313 14 



3,605,173 84 
33,047 96 



151,759 70 
24.994 53 



67 65 



1.438,780 99 

2,083,943 78 

7.535 01 



*39,074,356 54 



Decrease 



33 00 



.140 17 
768 69 



381 85 
854 46 



568 62 
169 22 



615 26 
.569 38 



* It should be noted that this figure represents the net increase, and not the total of the 
several items appearing in the "Increase" column. 



191 



THE CANADIAN BUDGETARY SYSTEM 

SUMMARY OF CONSOLIDATED FUND REVENUE BY DEPARTMENTS 



1914-15 



Department 



Part 



1915-16 



Increase 



Decrease 



$ 

284 

75,981 

3,682' 

13 

21,840 

45, 

3,176 

52, 

1, 

11 

789, 

125, 

136, 

13,047, 

41, 

487, 
12,702, 

5, 
125, 
521, 



cts. 
998 21 
143 92 
453 42 
078 00 
995 03 
092 99 
718 47 
561 77 
121 84 
479 36 
273 82 
323 90 
635 67 
784 72 
634 OS 
031 26 
584 41 
551 31 
435 94 
173 10 
345 91 
018 70 
045 93 



Agriculture 

Archives 

Customs 

External Affairs 

Finance 

Indian Affairs 

Inland Revenue 

InsuranceSuperintendence 

Interior 

Justice 

Labour 

Legislation 

Marine 

Militia and Defense 

Mines 

Naval Service 

Post Office 

Printing and Stationery. . 

Public Works 

Railways and Canals 

Royal N. W. M. Police. . . 

Secretary of State 

Trade and Commerce .... 



$ cts. 
307.913 31 



$ cts. 
22,915 10 



98,714, 

8, 

5.946, 

50, 

24,218, 

52, 

2,305, 

47, 

1, 

13, 

455, 

292, 

1, 

172, 

18,859, 

§0, 

507, 

19,045, 

5, 

121, 

937, 



302 42 
062 50 
571 41 
803 16 
216 00 
951 27 
770 04 
519 34 
128 18 
949 55 
777 33 
273 36 
824 62 
331 76 
026 97 
672 48 
987 34 
555 06 
969 50 
654 05 
578 62 



22,732, 

6, 

2,263, 

37, 

2,377 



849 00 
984 50 
576 38 
710 17 
497 53 
389 50 



2,625 65 



166, 

1. 

36, 

,8li, 
39, 
20, 

,343, 



488 64 
190 57 
300 50 
442 56 
121 17 
551 40 
381 96 
623,59 



$ cts. 
143 92 



870,351 80 

4,960 02 

145 64 

333,858 34 



3,364 65 



416,532 69 



13,073,481 73 



172,147,838 27 



*39,074.356 54 



* It should be noted that this figure represents the net increase and not the total of the 
several items appearing in the "Increase" column. 

The expenditures are similarly summarized by ser- 
vices and by departments. Unlike the revenue sum- 
maries, these summaries include expenditures not merely 
from the Consolidated Fund but also from the capital and 
other special funds, and show the expenditures so 
segregated. On the other hand they fail to disclose 
increases or decreases over the preceding year. The 
summaries for 1915-16 are as follows: 



192 



SYSTEM OF FINANCIAL REPORTS 

SUMMARY OF EXPENDITURES, BY SERVICES 

Total 

Consolidated Fund S cts. 

Administration of Justice 1,477,238 43 

Adulteration of Food 44,721 51 

Arts and Agriculture 3,452,153 76 

Charges of Management 435,527 28 

Civil Government 6 , 408 , 856 63 

Customs 3,685,399 40 

Dominion Lands and Parks 3,418,297 80 

Dominion Police 116,664 54 

Excise 897 ,671 34 

Fisheries 1 , 1 15 , 303 29 

Government of the Northwest Territories 5 , 232 08 

Government of Yukon Territory 344,575 36 

Immigration 1,307,480 49 

Indians 2,190,333 48 

Interest on Public Debt 21,421,584 86 

Labour 56,741 58 

Legislation 1 , 180 , 363 26 

Lighthouse and Coast Service 1 ,937 , 759 08 

Marine Hospitals 66, 740 80 

Mail Subsidies and Steamship Subventions 1 , 768 , 757 27 

Militia and Defence 4,681,502 99 

Mines and Geological Survey 462 , 787 33 

Miscellaneous 1,153,894 11 

Naval Service 1 , 154,426 27 

Ocean and River Service 1,213,917 52 

Penitentiaries 903,318 II 

Pensions 671,133 25 

Post Office 16,009,138 77 

Premium, Discount and Exchange 296,308 70 

Public Works. Consolidated Fund 12,039,252 06 

Public Works, Collection of Revenue 857 , 877 09 

Quarantine 203 , 308 69 

Railways and Canals, Consolidated Fund 671 ,590 43 

Railways and Canals, Collection of Revenue 20, 777 ,829 68 

Royal Northwest Mounted Police 1 , 395 ,022 45 

Scientific Institutions 463 , 494 42 

Sinking Funds 1,773,021 11 

Steamboat Inspection 64,884 01 

Subsidies to Provinces 11,451,673 28 

Superannuation 454 , 342 04 

Trade and Commerce 1 ,906, 150 43 

Weights and Measures, Gas and Electric Light Inspection 305,215 24 



130.241.490 22 



Capital 

Public Works 6,534. 138 43 

Public Works (Marine Department) 1 .937,090 48 

Railways and Canals 30,095,721 59 



38,566,950 50 



Other Expenditures 

War Account 166, 197, 755 47 

Bounties on lead and crude petroleum 109,236 68 

Charges of Management — Loan Account 3 , 160, 556 55 

Subsidies to Railways 1 ,400, 171 42 

Railway Grade Crossing Fund 47 ,079 99 



170,914,800 11 



Recapitulaiion 

Consolidated Fund 130.241,490 22 

Capital 38,566,950 50 

Other Expenditures 170,914,800 11 

339,723,340 83 

193 



THE CANADIAN BUDGETARY SYSTEM 

SUMMARY OF EXPENDITURE, BY DEPARTMENTS 



Expenditure by 
Departments 



Page 



Capital 



Consolidated 
Fund 



Other 
Expenditures 



Total 



Agriculture 

Archives 

Auditor General's Of- 
fice 

Civil Service Commis- 
sion 

Conservation Commis- 
sion 

Consulting Engineer — 

Dom. Gov't 

Customs 

External Affairs 

Finance 

Governor General's 
Secretary's Office 
High Commissioner's 
Office — London . 

Indian Affairs 

Inland Revenue 

Insurance 

Interior 

Justice 

Labour 

Legislation 

Marine 

Militia and Defence. . 

Mines 

Naval Service 

Post Office 

Printing and Station 

ery 

Privy Council 

Public Works 

Railways and Canals. 
Royal Northwest 
Mounted Police . . 
Secretary of State. . . . 
Trade and Commerce. 
War Accounts by De- 
partments 
($166,197,755.47) 

Agriculture 

Auditor General's 

Office 

External Affairs 

Finance 

Governor General's 
Secretary's Office 

Indian Affairs 

Inland Revenue 

Interior 

Justice 

Labour 

Legislation 

Marine and Fisheries. 
Militia and Defence. . 

Naval Service 

Post Office 

Privy Council 

Public Works 

Railways and Canals . 
Secretary of State. . . . 
Trade and Commerce . 
War Purchasing Com- 
mission 



A-2 
B-2 

C-2 

Y-2 

A-2 

U-2 
D-2 

E-2 
F-2 

G-2 

F-2 
H-2 
1-2 
J-3 
K-2 
L- 
M- 
N- 
0-2 
P-2 
Q-2 
R-2 
S-2 

T-2 

U-2 
V-4 
W-2 

X-2 
Y-2 
Z-2 



,937,090 48 



6,534,138 43 
30,095,721 59 



38.566,950 50 



$ cts 

4,161,308 72 

110,968 93 

146,724 29 

41,970 05 

126,670 60 

7,535 49 

4,021,394 49 

91,387 48 

36,907,414 34 

138,307 84 



54,134 14 
2,323,771 33 
1,400,137 20 
56.901 17 
6,597,530 61 
2,696,036 72 

121.621 85 
1,183,175 76 
3,687,192 83 
5,399,664 20 

773,640 45 
2,463,837 56 



$ cts. 



(a)3, 160.556 55 



16,858.669 63 

252.348 29 

70.880 64 

13.541,204 35 

21,639,547 73 

1.457,418 86 

117.519 92 

3.792,574 75 



5,077 79 

4,439 17 
11,211 06 
73,671 16 

9,108 81 

5,688 83 

6,723 40 

41,346 13 

1,489,201 35 

1,071 19 

270 00 

1,529 77 

160,433,416 42 

3,274,019 94 

349,672 00 

17,346 91 

94,344 04 

313,740 73 

21,667 98 

14,795 40 

29,413 39 



(6)1,447.251 41 



40 



(c) 109,236 68 



296,439,245 69 



4,717,044 64 



$ cts. 
,161,308 72 
110,968 9i 

146.724 29 

41,970 05 

126,670 60 

7,535 49 

,021,394 49 

91,337 48 

,067,970 89 

138,307 84 

54,134 14 
,323,771 33 
,400,137 20 

56,901 17 
,597,530 61 
,696,036 72 
121,621 85 
,183,175 76 
,624,283 31 
,399,664 20 
773.640 45 
,463.837 56 
,858,669 63 

252.348 29 

70,880 64 

.075,342 78 

.182,520 73 

,457,418 86 
117,519 92 
,901,811 43 



5.077 79 

4,439 17 
11,211 06 
73,671 16 

9,108 81 

5,688 83 

6,723 40 

41,346 13 

489,201 35 

1,071 19 

270 00 

1,529 77 

,433,416 42 

,274,019 94 

349.672 00 

17,346 91 

94,344 04 

313,740 73 

21.667 98 

14,795 40 

29,413 39 



339,723,240 83 



a Charges of Management, Loan Account. 

b Railway Subsidies 1 ,400, 171 42 

Railway Crossing Fund 47 ,079 99 



c Bounties on lead and crude petroleum. 



1,447,251 41 



194 



SYSTEM OF FINANCIAL REPORTS 

In addition to the foregoing summaries of expendi- 
tures, attention should again be called to the ''Summary 
of Grants and Expenditures/' already reproduced in 
connection with the discussion of ''Appropriation Ac- 
counts" showing the grant and expenditure, and the re- 
sulting balance or deficit for each service. The great 
value of this statement as a financial document, quite 
aside from its use as a summary of the audit of appro- 
priation accounts, needs no pointing out. It is, there- 
fore, somewhat surprising to find that no similar sum- 
mary is presented arranged by departments. The 
absence of such summaries would seem to constitute an 
omission of vital financial information. 

In support of each item of each of the summaries re- 
produced, there is presented a detailed itemization, 
under the general head of "Details of Expenditure and 
Revenue." These detailed tables are arranged by de- 
partments only, but the tables of receipts and expendi- 
tures for a single department are generally made use of 
to support both the departmental and the service sum- 
maries. This is made possible by the fact that in 
almost every case a source of revenue is confined to a 
single department and a service is administered by only 
one department. Thus, for example, the detailed tables 
of revenue and expenditure for the Marine and Fisheries 
Department support not merely the items in the sum- 
maries for that department but those for the revenues 
from Dominion Steamers, Fisheries, Mariners Fund, 
etc. and those for the expenditures for the Ocean and 
Rivers Service, the Lighthouse and Coast Service, 
Steamboat Inspection, etc.^ This use of the tables is 
facilitated by summary tables of revenue and expendi- 

195 



THE CANADIAN BUDGETARY SYSTEM 

ture, under each department, preceding the detailed 
tables and arranged under heads paralleHng those used 
in the main summaries; and by the corresponding 
division and arrangement of the detailed tables. 

The degree of itemization to which these tables of 
''Details of Expenditure and Revenue" go has already 
been referred to. The names of all permanent em- 
ployees are given, the length of time served during the 
year, and the salary rate. Expenditures for trifling 
purchases are entered in detail. On the revenue side the 
items are almost equally replete with detail. The tables 
thus extend over nearly 1400 closely printed pages. 

It is hardly necessary to point out how complete is 
the information that is presented by these tables and the 
detailed statement of the expenditures of the several de- 
partments, and how thoroughly, through their aid, the 
financial operations of any service may be studied. The 
only criticism that may be made regarding these detailed 
tables is that the items are not always classified in such 
a way as to bring out significant facts. Instead of being 
classified according to any principle, the items are listed 
alphabetically according to the names of payees. 

Budget Speech of the Minister of Finance. The 

budget speech of the Minister of Finance is delivered 

1 W^here a single class of revenues is derived from several depart- 
ments, an intermediate schedule is given showing the amount of such 
revenue derived from each department, the departmental tables of 
revenue in turn serving as supporting schedules to such intermediate 
schedule. This is done in all three such classes of revenue — casual 
revenue, fines and forfeitures, and public works revenue. Curiously 
enough, however, on the expenditure side, when a single "service" is 
distributed over several departments, no such intermediate schedule 
is given. Thus, for the two "services" so distributed — Civil Govern- 
ment, and Pensions — the expenditure by departments can be ascer- 
tained only by drawing off the figures given in the detailed tables 
under each department. 

196 



SYSTEM (3F FINANCIAL REPORTS 

upon his making the motion that the Speaker do now 
leave the chair for the House to go into Committee of 
Ways and Means. The nature of this address is shown 
by the budget speech dehvered by the Minister of 
Finance, April 24 of the present year (1917), which, for 
purposes of illustration, has been reproduced in one of 
the appendices to this volume. 

It will be seen by consulting this appendix that the 
Minister of Finance makes no attempt in this speech to 
present any comprehensive or detailed statement of the 
condition of the finances or the financial operations of 
the year. Neither does he in it attempt any but the most 
incidental consideration of the Estimates as brought 
forward by the Government. The only point receiving 
any careful attention is that of the proposals of the Gov- 
ernment for the raising of revenue either by way of 
loans or increased taxation. In this the Canadian 
budget speech corresponds closely with its prototype, 
the budget speech of the British Chancellor of the Ex- 
chequer. - 

It cannot but be deemed a matter of regret that the 
occasion of the delivery of this speech is not taken ad- 
vantage of by the Minister of Finance to get before the 
House a full exposition of matters relating to the 
national finances, the revenues and expenditures of the 
government in the past, the present condition of the 
public treasury, and the financial and work program of 
the government for the future. His failure to do so 
means that the members of the House and all others in- 
terested in the national finances are compelled, without 
guidance on the part of the authorities responsible for 

197 



T?IE CANADIAN BUDGETARY SYSTEM 

the conduct of public affairs, to resort to the financial 
data which is contained in the original reports which 
have been described. Ample as these data are, con- 
siderable trouble and judgment is required in order to 
determine their full purport. 



198 



CHAPTER XII 

POLITICAL EVILS AND THEIR EFFECT ON 
CANADIAN FINANCIAL ADMINISTRATION 

In order fully to understand the actual operation of 
Canada's system of financial administration, certain 
partisan usages and political evils which profoundly 
affect its workings need to be considered. 

The Spoils System and Patronage Lists. While 
civil service reform has mxade some headway in Canada 
and a Civil Service Commission modeled after those 
found in the United States has been in existence since 
1908, the spoils system still flourishes. So far only 
officials in the ''inside" service, namely, such as are em- 
ployed in the government departments at Ottawa, have 
a permanent tenure of office. In all other cases, both 
original appointments and promotions are governed 
more or less by party considerations. That the spoils 
system still flourishes in Canada is evidenced by the fol- 
lowing statements : 

At Confederation we started out perhaps with the 
idea that we would not have a political patronage 
system at all, but in two or three years the Govern- 
ment, under the leadership of Sir John Macdonald, 
abandoned these early ideals and adopted a patronage 
system applicable both to Government contracts and 
supplies of goods to the Government and to appoint- 
ments to public office. That system was certainly 
continued by the Mackenzie administration. They 
went out of power in 1878. During the last years of 
the Mackenzie administration a number of appoint- 
ments were made, some before the Government 
retired and some shortly after it had retired, which 

199 



THE CANADIAN BUDGETARY SYSTEM 

were promptly annulled when the Conservative ad- 
ministration took power. * * * The spoils sys- 
tem under the Conservatives had as its cardinal 
principle that where public money was to be spent 
it must be spent among political supporters. There 
existed in every departmicnt of the Conservative 
administration what was known as a patronage list, 
kept under lock and key, and upon it was the name 
of each Government supporter, each true Conserva- 
tive, with whom the Government desired to deal in 
order that when pubHc money was expended it should 
reach the pockets of the Governrnent supporters to 
the exclusion of others. In addition to that, they had 
their middlemen, their commissions and their paid 
agents. "" 

When the Conservatives came to power in 1878 
they dismissed nearly 500 employees from the Inter- 
colonial and they replaced them the next day with 
their own partisans.^ 

On the return of the liberal party to power in 1897 the 
same practices were continued. 

We have, in the twelve years we have been in office, 
accepted the system, vv^hich has been in existence 
since Confederation, of making appointments on 
party lines. In this we follow^ed the example set by 
our predecessors.^ 

When my hon. friends opposite came into power 
there was not a single man on the Intercolonial 
Railway who, for at least a year after the change of 
Government, felt sure of his position. ^ ^ ^ Very 
few of the employees w^ho were unorganized, or were 
not backed by a strong union, were kept in their 
position. Section men were dismissed by the whole- 
sale.* 

1 Mr. Guthrie — Can. Hansard, 1909-10, p. 2453. 

2 Mr. Emerson — Can. Hansard, 1907-08, p. 9183. 

3 Sir W^ilfrid Laurier — Can. Hansard, 1907-08, p. 9201. 
'^ Mr. Lesperance — Can. Hansard, 1911-12, p. 5806. 

200 



POLITICAL EVILS 

Nor has any considerable improvement taken place 
since the present administration assumed offire. Under 
its regime 13,000 changes have occurred among^ the 
45,000 employees in the government service." 

We have the statement on oath of Mr. W. H. 
Brown, the head of the purchasing staff of the 
Department of Militia and Defence that the patron- 
age list on file in his office at Ottawa, a list furnished 
to him by the supporters of the party in power, 
contains the names of no less than 8,000 of their 
political favorites.^ 

Outside of promotions of high ofTicials, I have no 
hesitation in saying that as between two men, other 
things being equal, both being qualified, the Tory will 
get the job." 

Other things being equal I would expect the pur- 
chases to be made from those who are friends of the 
Government.* 

On both sides we have been going on wath the idea 
that the money we get into the public treasury is to 
be used for party advantage. What did the Minister 
of Railways boldly say the other night? He said: 
'Tf I have advertising to give or supplies to buy, I 
wnll deal with a friend of the party." * ^ * j|- 
means that the money of this country is for the party 
and the Government to do what it likes vnth; doing 
fairly well if possible by the country, but taking 
mighty good care always to help the party. ^ 

As between the two great parties in Canada it 
would seem to me that honors are about easy in the 

^ Mr. Devlin — Can. Hansard, 1916, p. 353. 

2 Mr. Sinclair — Can. Hansard, 1916, p. 417. 

3 Mr. Hughes — Minister of Militia and Defence, Can, Hansard, 
1911-12, p. 5450. 

* Mr. Hazen — Minister of Marine arid Fisheries, Can, Hansard, 
1914, p. 415. 

^ Mr. Foster — Can. Hansard, 1910-11, p. 6607. 

201 



THE CANADIAN BUDGETARY SYSTEM 

sinning in connection with civil service appoint- 
ments/ 

The following passage gives a good picture of the 
wide extent and powerful influence of the party patron- 
age system. 

The premier and his selected councillors make up 
the Ministry, that is the first; after that comes the 
caucus and its elected components; after that comiCs 
the local candidate in his district, with his circle of 
party supporters; and lower down in the scale come 
the district committee with their control of the petty 
patronage which has to be dispensed within the 
purview of their own jurisdiction. That makes a 
complete chain. * ^ * This is a wonderfully con- 
centrated and correlated system. There is not a 
section of the country from one end to the other 
which is not under its influence and w^hich today is 
not throbbing and pulsating with the stimulus de- 
rived from the party patronage system.^ 

Appointments to Government offices and the award- 
ing of federal contracts are largely in the hands of local 
patronage committees. 

My honorable friend knows that when his party 
was in power, and when other parties were in power, 
also, people in different constituencies would organize 
themselves into patronage committees and make 
representations to the member from that constitu- 
ency, or to the Government with regard to appoint- 
ments to ofiice, and as to and from whom purchases 
should be made and so on.^ 

From one end of Canada to the other it is nothing 
but politics and the patronage list. Why, down in 
New Brunswick, the patronage committee even ap- 

1 Mr. Emerson — Can. Hansard, 1907-08, p. 9182. 

2 Mr. Foster — Can. Hansard, 1909-10, p. 2435. 

3 Mr. Hazen — Can. Hansard, 1914, p. 415. 

202 



POLITICAL EVILS 

points commissioned officers up to lieutenants. If a 
man wants an appointment as lieutenant in the 
Province of New Brunswick he goes to the patronage 
committee/ 

The Militia Department and the Government have 
allowed the matter of patronage in connection with 
militia supplies to drift into the hands of local patron- 
age committees. Although all persons, Liberal and 
Conservative aHke, are doing their share in the matter 
of enlisting and recruiting, sending their sons to the 
front — both parties in equal degree, I think — and con- 
tributing to patriotic and Red Cross funds, no person 
but one who is on a certain side of politics in parts 
of the country with which I am familiar, can get 
anything to do at all.^ 

It is not patronage committees only that we com- 
plain of, but it is patronage lists that exist whenever 
stores or supplies of any kind are bought. Almost 
every official that was examined before the Royal 
Commission spoke of these lists as a matter of course, 
that of course everything was bought with a view to 
politics, that no service was performed, no person was 
employed, no goods were purchased, as a rule, except 
in view of some political advantage to the party.^ 

As most Canadian officials were originally appointed 
on the strength of party services rendered it is natural 
that they should be tempted to continue their political 
activities after they have assumed office. 

I quite acknowledge that an employee in the civil serv- 
ice may so conduct himself in the course of an election as 
to warrant the party he opposes, if successful in that 
election, in dismissing him the moment Parliament 
meets. In the hustings or in the course of private can- 
vass, he may personally abuse the leaders of the party to 

1 Mr. Carvell — Can. Hansard, 1916, p. 1419. 

2 Mr. Martin — Can. Hansard, 1916, p. 3379. 

^ Mr. Lennox — Can. Hansard, 1907-08, p. 9206. 

203 



THE CANADIAN BUDGETARY SYSTEM 

which he is opposed. He may go to meetings and inter- 
rupt in such a rude and offensive manner, bringing with 
him possibly a gang of roughs to back up his interrup- 
tions, as to fully justify the successful party in dispensing 
with his services without delay. * * *' If it is right and 
proper for a member of the civil service to work for the 
Government of the day, if he belongs to that party, it is 
equally right and proper for him to work for the oppo- 
sition if his poHtical opinions lean to their side.' 

The Intercolonial Railway with some few exceptions 
which I cheerfully recognize is a hot bed of political 
propagandism. The bitterest and most offensive parti- 
sans to be found in Canada are to be found in connection 
with that [Government] road.^ 

When a change of government takes place active par- 
ticipation of this sort in election campaigns leads to the 
removal of the offending public official on the ground of 
political partisanship. The part played by members of 
Parliament in effecting such dismissals is recounted 
below : 

I am following the policy laid down by the House. 
When a member charges that an official has been an 
active partisan in his constituency I ask for his dismissal. 
But in the case of another constituency, where there is 
not a [Government] member to represent the constit- 
uency, if a charge is made I have an investigation and 
if it is proven that the official has been an active partisan, 
of course he is dismissed."^ 

I do not think it is edifying to see public officials, 
occupying places in the Civil Service, taking an active 
part in politics, on one side or the other. If they do so 
they know full well that they are, under the resolution 
of the House, taking their positions in their hands, and 

1 Mr. Macdonald — Can. Hansard, 1896, 2nd session, p. 528. 

2 Mr, Davies — Can. Hansard, 1896, 2nd session, p. 1091. 

3 Mr. Reid — Can. Hansard, 1912-13, p. 8734. 

204 



POLITICAL EVILS 

they will have no reason to find fault should they be dis- 
missed when a change of government takes place/ 

They (Government officials) are under the impression 
that if they do not serve the Conservative party, (in 
power) they will be turned out.' 

As will be pointed out later, the bestowal of govern- 
ment contracts on party favorites and the resultant ex- 
clusion of outside bidders enhances the cost of the pul)- 
lic improvements undertaken by the Dominion authori- 
ties. The effect of the spoils or party patronage system 
on appointments to the civil service has been graphically 
pointed out by the present Prime Minister of Canada. 

The present system causes many abuses to flourish. 
In some cases at least subordinates in the different de- 
partments are appointed w4ien they are not required. 
The head of the department would not select the man 
whom he is bound to receive if he w^ere left to exercise 
his own judgment. Inefficient appointments are made. 
There are useless men in the departments in Ottawa to- 
day; every minister of the Crown know^s that. * * * 
Not only have inefficient appointments been made, but 
places have been created that political supporters of one 
party or the other might be satisfied. The political in- 
fluence of appointees is exercised. That more or less de- 
stroys discipline. 'J^ * * I have been told that there are 
men on the Intercolonial today who cannot and dare not 
keep their subordinates under them in a proper state of 
discipline simply because they know the effect which the 
political influence of these subordinates, appointed by 
political pull, can exercise upon themx. Does that tend 
to good service or good discipline? Political support is 
bartered for promise of office, and the time of mJnisters 
and members is needlessly and absurdly taken up with 
patronage. * * * Members of Parliament on the other 
side of the House have told me, in some cases that half 

1 Mr. Hazen — Can. Hansard, 1914, p. 1176. 

2 Mr. Marcil — Ibid. 

205 



THE CANADIAN BUDGETARY SYSTEM 

their time, in other cases that three-fourths of their time 
was taken up in deahng with matters of appointment to 
pubHc office/ 

In consequence of the existing system of favoritism in 
appointing persons to government positions,, the Cana- 
dian civil service is undoubtedly overmanned. 

The public service is overmanned to a remarkable de- 
gree and on account of this overm.anning, of inefficient 
organization, of duplication and other kinds of waste, 
there is a loss, conservatively estim.ated,. of over 
$5,000,000 a year/ 

Canadian public men have freely conceded that the 
patronage system exerts a demoralizing and corrupting 
influence on the political life of the Dominion. In a 
farewell speech delivered in Toronto on September 24, 
1878, the Earl of Dufferin, when retiring from the post 
of Governor General of Canada, used the following 
weighty words concerning the importance of removing 
the civil service of the Dominion from the sphere of party 
politics : 

The chief danger against which you have to guard is 
that which concerns the civil service of the countr}^ 
Now the civil service of the country, though not the ani- 
mating spirit, is the living mechanism through which 
the body politic moves and breathes and has its being. 
Upon it depends the rapid and economical conduct of 
every branch of your affairs. If you take my advice 
you will never allow your civil service to be degraded 
into an instrument to subserve the end and interests of 
any political party. 

If there is any laxity in the public virtue of this coun- 
try today, if there is any canker of public corruption, in 
ninety-nine cases out of a hundred you can trace it to the 

1 Mr. Borden — Can. Hansard, 1907-08, p. 9197. 

3 Ottawa Civilian — Quoted in Can. Hansard, 1915, p. 1032. 

206 



POLITICAL EVILS 

baneful effect of political part}^ patronage. '^ * * In the 
whole course of my political life I cannot point to a single 
instance where political patronage ever helped the status 
of the bench, ever helped the status of the civil service, 
ever helped in the economy of public administration, ever 
helped a member of Parliament in reality: it almost 
always causes the dry rot and disintegration that breaks 
up government after government and party after party/ 
Of good augury for the future is the fact that a begin- 
ning has been made with civil service reform by the 
federal authorities in Canada. Some 5,000 out of a 
total of 45,000 Dominion government employees are now 
protected by civil service rules. It only requires the pas- 
sage of an order in council to include all government 
servants within its sheltering provisions and thus to put 
an end to the whole spoils system as far as appointments 
to office are concerned. But so far no ministry in office 
has had the courage to take so bold a step. Even the 
chance afforded by Canada's participation in the Euro- 
pean war was not taken advantage of to bring about this 
much needed reform. 

This Government has been given the greatest oppor- 
tunity in the whole history of this country, when the 
hearts of our people are stirred by this grave issue, to 
endeavor to arrive at some system by which the public 
men in the country on both sides will agree that some 
substitute shall be found for patronage evils. ^ 

Partisan Apportionment of Government Con- 
tracts. It is prescribed by law in Canada that no con- 
tracts of any size for government work shall be given 
out until after bids or tenders have been asked for from 
the general public. If, however, the amount involved 
is less than $5,000, bids may be dispensed with. 

^ Sir George E. Foster — Can. Hansard, 1916, p. 949. 
- Mr. Macdonald — Can. Hansard, 1916, p. 1314. 

207 



THE CANADIAN BUDGETARY SYSTEM 

The letter of the law says you must not give any work 
without calling for tenders for work that costs more 
than $5,000, but you can let it by piecemeal in contracts 
under $5,000/ 

We pass a law in which we lay down the principle that 
these expenditures shall be made by tender and contract, 
but as a too rigid adherence to that rule would som.etimes 
lead to trouble, we make an exception and provide if, in 
the case of an expenditure up to $5,000, the minister has 
reason to believe that the work could be better or more 
quickly done by day labor, he makes his request and gives 
his reason to council, and if the council consents the 
work is done in that way.^ 

Nominally, all persons have the right to bid on the 
larger government contracts, tenders being called for by 
public advertisement. In smaller contracts and pur- 
chases, however, tenders may be and often are confined 
to friends of the administration. Should a firm not 
adhering to the Government side submit a lower bid than 
anyone else, the minister m.ay either decline to award 
any contract on the ground that all the bids are unsatis- 
factory or^^ with the consent of the Governor in Council, 
he ma}^ pass over such bid on the ground that it is ''in- 
expedient to let such work to the lowest tenderer."^' 

The tender system in these Conservative days was a 
perfect farce. * ''' "^ Conservatives only could supply 
goods, but in the first place the}^ must be put on a pre- 
ferred list at the recommendation of a leading Conserva- 
tive. When they vvere placed on that list they were 
entitled to receive tender papers.* 

In many cases tenders are asked from friends of the 
Government. There are cases when they are asked for 

1 Mr, Bergeron — Can. Hansard, 1906-07, p. 6104. 

2 Mr. Foster — Can. Hansard, 1908-09, 3266. 
•* Chapter 39, Sec. i6, sub. 2, R. S. C. 

* Mr. Guthrie — Can. Hansard, 1909-10, p. 2458. 

208 



POr.rj^K'AL EVILS 

from people on both sides of politics. The purchasing 
agent tells me that the same policy prevails as has pre- 
vailed for many years past/ 

We are told that contracts are let to the lowest bidder. 
We do not know how tenders are put in, and who opens 
them, or how they are worked after they are opened, but 
we generally find the contract in the hands of a friend, 
and a favorite of the Government gets the contract.' 

It has been pointed out previously that the local 
patronage committees concern themselves with the 
giving out of government contracts. Members of Par- 
liament are also consulted in this connection. 

We know that the Post Office department will not 
award a contract until they have consulted either the 
Conservative member for the county or the defeated can- 
didate in the last election.^' 

On a change of administration, contracts held by 
adherents of the former Governrnxcnt are often cancelled. 

A return was laid on the table of the House in the first 
year after the Conservatives were in office showing that 
over 500 mail contracts were cancelled during that first 
year. The return shows that a great many of the con- 
tracts which had not expired v/hen the Government took 
office were cancelled when they came in and new con- 
tracts given to their friends.'^ 

On account of all these practices, followers of the 
Opposition have often felt that it was useless for them to 
bid on government contracts. 

It has become the opinion of traders that none but 
certain friends can get the patronage, whatever political 

1 Mr. Hazen — Minister of Marine and Fisheries, Can. Hansard, 
1914, p. 411. 

2 Mr. Sproule — Can. Hansard, 1906-07, p. 5726. 

3 Mr. Kyte — Can. Hansard, 1916, p. 2718. 

* Mr. Sinclair — Can. Hansard, 1916, p. 2104. 

209 



THE CANADIAN BUDGETARY SYSTEM 

party is in power. Liberal or Conservatives. The result 
is very little competition/ 

This absence of full competition prevents the heads 
of departments from purchasing to advantage and often 
leads to excessive prices being paid for government sup- 
plies. 

Public Works Expenditures to Further Party In- 
terests. As shown above, both official positions and 
government contracts are often bestowed in Canada with 
the primary object of advancing the interests of the 
party in powxr. The same conditions obtain in respect 
to expenditures for public improvements. In planning 
these, partisan considerations have come to hold the first 
place rather than the general needs of the country's de- 
velopment. Government and opposition parliamentary 
districts are treated on quite uneven terms as far as pub- 
lic works are concerned, and little attempt is made to 
dole out even-handed justice to districts of a different 
political complexion. 

Now that the honorable gentlemen on the other side 
have supplied all their ridings with public buildings, they 
must not be surprised if we, on coming into power, pay 
some attention to ours. That is the position I take with- 
out hesitation. ^ * ^' Of course we must not squander 
public money on useless buildings — we all agree to that. 
I do not object to being criticized; I do not object to the 
brake of the opposition being put upon any minister — 
far from it. But there is reason in all things. The 
Liberal party has been long in opposition and. ridings 
that have been so long neglected by the government have 
rights that I, for one, will endeavor not to forget.^ 
. Last night I heard the member for Guysborough (Mr. 

^ Mr. Guthrie — Can. Hansard, 1909-10, p. 2459. 

3 Hon. Mr. Tarte, Minister of Public Works — Can. Hansard, 1902, 
p. 659. 

210 



POLITICAL EVILS 

Sinclair) say that during" fourteen years when the Con- 
servatives were in office not a single dollar had been ex- 
pended in the way of constructing a public building in 
that constituency. Well, this is the fifteenth session I 
have been in this Parliament, and I have not yet had in 
all those years a dollar expended within the confines of 
my (opposition) constituency/ 

Every new public work in this list is for a riding 
represented by a Liberal in this House. ^ 

The same favoritism towards districts returning Gov- 
ernment candidates is still in vogue today. 

Take the w^hole list, and you will find that with the 
exception of two places in the Province of Ontario, these 
drill halls for the culture of the youth and beauty — as the 
minister put it — of the Province, had been established 
w^here Tory candidates were returned in 1911.^ 

It is known to every person in the Province of Nova 
Scotia that, during the last fifteen years, public works 
have always been dangled before the constituencies just 
before the eve of an election.* 

As an illustration of how the promise of government 
patronage is made use of to influence voters, the follow- 
ing passages may be cited : 

Conservatives in this town knov\^ that Robert Beith 
can get Government favors for this town if any man 
can. We want a new post office and customs house, 
don't we? Other ridings have received new public 
buildings. We want our share of patronage, but can 
only get it by sending a Government supporter to ask 
for it. Return Mr. Beith to Parliament and Bow^man- 
ville will get these necessar}^ public buildings.^ 

If a man should pay fifty cents in corrupting an elec- 
tor, he is unseated and disqualified, but the Government 

^ Mr. Roche — Can. Hansard, 1910-11, p. 3047. 

2 Mr. Bennett — Can. Hansard, 1903, p. 13123. 

3 Mr. Pardee — Can. Hansard, 1914, p. 3430, 

* Mr. Davidson — Can. Hansard, 1911-12, p. 2810. 
^ Canadian Statesman — Jan. 8, 1902. 

211 



THE CANADIAN BUDGETARY SYSTEM 

can deliberately buy up an electorate by means of pub- 
lic buildings and there is no check to prevent that/ 

Public expenditures should not be a consideration at 
elections. I know it has been the practice again and 
again to say: If you support the Government you will 
get a post office or such and such a public edifice. Well, 
we object to this. Whenever an election takes place the 
country has to judge upon the policy of the administra- 
tion; and if you allow the consideration to go to the 
electors, that they are to be favored with public edifices 
provided they will return a supporter of the Government, 
then the electorate must be biased. They are bribed to 
a certain extent, to give an unfair verdict." 

The refusal of the administration to make impera- 
tively demanded expenditures on public works in oppo- 
sition districts oftentimes retards the progress of the 
country and enhances governmental expenditures in the 
long run. 

When the City of Toronto asked the Minister of Pub- 
lic Works to consider the case they were in, that a little 
expenditure would make a harbor at that great city, 
where railroads are centering and commerce is in- 
creasing, a harbor that would be a credit and a benefit not 
to Toronto alone, but to the whole country — the Gov- 
ernment hesitates about spending even a small sum there. 
Why? The honorable Minister himself gives the 
answer in the question : 'What has Toronto done for me?' 
Unfortunately for the harbor "^^ ^ * the city does not re- 
turn to this House one representative of the same polit- 
ical complexion as the honorable gentlemen on the 
treasury benches.^ 

The late Mackenzie (Liberal) Government in 1877 
constructed a breakwater in the district of L'Ardoise at a 
cost of $30,000. In the course of time repairs were 

1 Mr. Lister — Can. Hansard, 1892, p. 2757. 

2 Mr. Laurier — Can. Hansard, 1890, p. 1870. 

3 Mr. Brock — Can. Hansard, 1902, p. 1561. 

212 



POLITICAL EVILS - 

needed upon that breakwater, but the county was repre- 
sented by a Liberal and the Conservative Government 
absolutely refused to spend one dollar for repairing the 
breakwater, much less to expend money upon new pub- 
lic works. The consequence was that in the course of 
years continual storms so destroyed the breakwater that, 
instead of its being a protection to the fishermen, it be- 
came a menace to them. It w^as not until the break- 
water had been absolutely destroyed that an appro- 
priation was finally made to renew it, and it cost the 
late Liberal Government twace as much to rebuild that 
breakwater as it would have cost if the late Conserva- 
tive Government had spent a reasonable amount each 
year in maintaining it.^ 

It results from these conditions that while the Cana- 
dian federal government since confederation has ex- 
pended large sums on public works of various kinds, 
much of this outlay has gone for work not really needed. 
A typical instance is described in the next two citations. 

The Government expends $16,000 to erect a post office 
at Laprairie. Now, why is this done? It is done for 
the simple reason that Laprairie was in the hands of the 
Liberal party during the last Parliament and the Gov- 
ernment wanted to secure the return of a man from that 
county to support them in this House, and so they offered 
this bribe to the electors of Laprairie.^ 

The official return shows that the gross receipts from 
mail matter at Laprairie hardly exceeded $1.00 a day, 
the gross receipts for the year being $433.16, about $1.25 
for every day in the year. About thirty or forty letters 
is the gross amount of correspondence per day which 
passes through this office.^ 

The construction of government docks and wharves 
has furnished another field for unproductive expenditure. 

* Mr. Kyte — Can. Hansard, 1911-12, p. 2811. 

2 Mr. Sommerville — Can. Hansard, 1892, p. 2804. 

3 Mr. Mulock — Ibid. p. 2810. 

213 



THE CANADIAN BUDGETARY SYSTEM 

Here is a list of docks in the Province of Quebec, 
built at the expense of hundreds of thousands to the 
people of Canada, showing receipts from those docks for 
the last year: Carleton, $28.07; Cedars, $17.10; Coteau 
du Lac, $27.84; Greece's Point, $10.24; Isle aux Grues, 
$ .12; Lacolle, $9.76; Perce, $24.71; St. Irenee, $55.69; 
St. Thomas de Montmagny, $2.62.^ 

I myself have seen a wharf which cost ten or twelve 
thousand dollars and had never been used. But money 
spent in that way is badly spent. We know^ how it was 
done, however. The member for the county tells the 
Minister that if he can get a wharf or a bridge con- 
structed, he will carry the parish or the township.^ 

Local Improvements at Federal Expense. At 

first expenditures on public improvements in the Domin- 
ion were confined to such as were of a distinctly federal 
character. 

In Mackenzie's time and in our time, there was a 
pretty well defined line between federal and provincial 
expenditure. The rule was that federal expenditures 
should be for federal purposes and that Provinces 
should be allowed to care for matters within their own 
scope. ^' * "^ The rule was held to that wharves and 
docks and breakwaters should be built on highways of 
travel and on the seaboard.^ 

In the course of timxC, however, the practice arose for 
the central government to look after improvements of 
even the most inconsequential nature. 

We first commenced with the principle that Dominion 
public works were to be confined to the sea-board and 
large harbors. We never extended it to the building 
of little wharfs all along the water courses of this 
Dominion and then the keeping of them up. "^^ * h« 

1 Mr. Bennett — Can. Hansard, 1903, p. 1517. 

2 Mr. Bergeron — Can. Hansard, 1900, p. loioo. 
•^ Mr. Foster — Can. Hansard, 1907-08, p. 5194. 

214 



POLITICAL EVILS 

Heretofore, wharfs on all these inland waters have been 
built by the people themselves, by the municipalities, by 
the aid of provincial money in some cases/ 

At first what the Dominion proposed to do was to look 
after the great public works of the country, not the 
small ones. In the course of negotiations with the 
Government of Nova Scotia, the Dominion Government 
took over the wharfs and piers which, after a certain ex- 
amination, were regarded as being important ones, and 
these the Dominion Government became bound to main- 
tain." 

We have been for many years assisting in the con- 
struction of wharfs, piers and breakwaters on our coast 
line. I think that is a reasonable expenditure. We 
cannot expect to satisfy the people of these smaller 
places by the statement that it is only in the great cities 
that money is to be spent. The Government must adapt 
its policy to the public requirements. In my opinion, 
there is no money spent more usefully for the people 
than the moderate sums spent on these piers and break- 
w^aters.^ 

Whatever is navigable water, whether tidal or in- 
land, is as fit a subject for the erection of wharves as 
are tide waters. If it is right that the Dominion Gov- 
ernment should be taxed to build a w^harf in the hon- 
orable gentleman's constituency, in tidal waters, it is 
equally legitimate to construct a wharf on inland waters 
W'hich are navigable.* 

It is a very dangerous policy to begin to build wharves 
along the lakes in Ontario. I think it will be a great 
pity if the system that has been customary so long in the 
eastern Provinces is to be imported into the inland 
waters of Ontario.^ 

In former times it v/as supposed that the Provincial 

^ Mr. Foster — Can. Hansard, 1900, p. 10098. 

2 Mr. Foster — Can. Hansard, 1905, p. 9564. 

3 Mr, Fielding — Can. Hansard, 1905, p. 9563. 

4 Mr. Mulock, Postmaster General — Can. Hansard, 1900, p. loioo. 

5 Mr. Osier — Can. Hansard, 1905, p. 9595. 

215 



THE CANADIAN BUDGETARY SYSTEM 

Gk)vernment had something to do with these things, but 
the Provincial Governments are being reHeved from 
them all. The Provincial Government does not now, it 
seems to me, in some of the Provinces, get a chance, to 
put a wharf on a little river. The smallest rivers are 
invaded and public money is spent for small wharfs. 
Anything in the nature of a landing place along the river 
for altogether local traffic is encompassed as well. Does 
not the Government see that by proceeding in that way 
with an entire lack of policy it becomes merely a matter 
of political patronage ? ^ 

If we are going to adopt the principle laid down that 
on every river, canal, and water course, wherever people 
want to get off and on, we are going to build a wharf, 
there will be no end of such expenditure.^ 

Through this encroachment on the sphere of the local 
governments, the federal budget often contains appro- 
priations for public improvements whose total cost falls 
short of a thousand dollars each. This employment of 
government funds for merely local or private interests 
has been repeatedly criticized. 

I can see some reason for the expenditure of public 
money because the enterprise is too great for the local 
community to spend. But, to spend $700 or $800 
upon wharves here, there and elsewhere, all along the 
sea coast, does not seem to me to be very good policy.^ 

When a work is of such a trifling character as only 
to amount to $1,000, it cannot be within the province 
of this Parliament to expend the money. * * * A 
trifling work like this is a matter for the municipality, 
or at most, for the Province, if it is a public work at 
all. Where is the line to be drawn ? * 

It appears to me that the practice of expending the 
money of the Dominion of Canada upon small under- 

1 Mr. Foster — Can. Hansard, 1905, p. 9555. 

2 Mr. Foster — Can. Hansard, 1900, p. 10099. 

3 Mr. Borden — Can. Hansard, 1909-10, p. 4230. 
* Mr. Lennox — Can. Hansard, 1903, p. 1156. 

216 



POLITICAL EVILS 

takings which are in their nature local is not a fair 
expenditure of the money of the Dominion. It may 
be a perfectly legitimate expenditure by a Province or 
it may be a perfectly legitimate expenditure by a local 
municipality. But, unless it serves the interest of 
Canada as a v^^hole, it is not an honest or judicious 
expenditure of the money of this country. We should 
not, as a Federal Parliament, vote the moneys of the 
people of this country, for the promotion of what is 
merely a local concern.^ 

Fancy the Government of the United States, who 
are quite as democratic in their system as w^e are, 
undertaking to build $200 or $300 breakwaters ; up to 
$3,000, $4,000 and $S,ooo wharves and piers on rivers 
which have little or no navigation at all. What do 
you suppose would be the reception which would be 
given to a proposal like that in the United States? 
The (U. S.) general government devotes its expendi- 
tures to large works where the general business of the 
country is involved, and local matters of small ac- 
count are undertaken by private persons, by corpora- 
tions and municipalities, or by the local governments.^ 

Despite the large aggregate expenditure made on 
them, the Dominion wharves yield hardly any revenue. 

Considering the enormous expenditures on these 
wharves, the sum of $10,000 or $12,000 seems to be a 
very small amount to be received from them in the 
shape of revenue.^ 

Indeed, in the case of the smaller wharves, no attempt 
even is made to collect wharfage dues. 

In the case of a large wharf and large expenditure, 
the question of dues would be material, but in the case 
of small wharves where it would cost more to collect 

^ Mr. Lennox — Can. Hansard, 1903, p. 1068. 

2 Mr. Foster — Can. Hansard, 1905, p. 9554. 

3 Mr. Borden — Can. Hansard, 1902, p. 4673. 

217 



THE CANADIAN BUDGETARY SYSTEM 

dues than they would amount to the department does 
not take into consideration the question of revenue/ 

Expenditures for Public Buildings to Further 
Party Interests. In the last decade, a marked in- 
crease has taken place in the expenditures of the Domin- 
ion Public Works Department. Prior to 1905, these 
never averaged more than four million dollars a year. 
In the fiscal year 19 14-15, the disbursements of this so- 
styled "spendthrift" department reached the high total 
of $29,282,316. Of the total amount appropriated for 
the purposes of this department, during the year named, 
no less than $14,891,300 was allowed for the erection of 
new public buildings. No well defined system is fol- 
lowed in determining these appropriations. 

There is no plan upon which these expenditures are 
made. There is no setting down by a competent au- 
thority, or competent board, and taking into account 
the amount of money it would be wise to spend, tak- 
ing into account the need of the services for which 
alone the money should be spent, taking into account 
the localities which are to be served and in the line of 
precedent. There is no such thing as that at all. No 
country in the world proceeds to its expenditure upon 
public works on the haphazard and secret plan on 
which this Dominion of Canada proceeds. It is a 
matter between the candidate, or the person pressing 
for the expenditure, and the minister who has charge 
of the expenditure. The expenditure is warranted by 
the Government before the House or anyone else out- 
side of it has any knowledge of the thing at all.^ 

The Canadian method of determining what expendi- 
tures shall be made on public buildings differs from the 
procedure followed in the Congress of the United States. 

1 Mr. Hyman — Can, Hansard, 1905, p. 9599. 

2 Mr. Foster — Can. Hansard, 1909-10, p. 1492. 

218 



POLITICAL EVILS 

In the United States, where we think they have 
been pretty extravagant, no Congressman can get an 
appropriation for public works by simply going to a 
minister and buttonholing him. He has to submit his 
resolution that it is wise to have a public building 
built in a certain place; he has to substantiate that 
before a responsible committee and that committee 
has the over-sight of the whole amount that is to be 
expended during any one year. Congressman A or 
Congressman B does not get $20,000 for a post office 
by going to the minister and persuading him to put it 
in the estimates; he has to go before the committee 
which has the examination into all the appropriations 
for all public buildings, and which considers the 
reasons for the expenditure and then decides what 
amount of money will be expended at any particular 
place. Then and not until then does it go into the 
estimates/ 

In Canada, members of the Dominion Parliament are 
primarily responsible for most of the public buildings 
erected. 

Our policy regarding public buildings is one that 
rests very often upon the vanity or the individual am- 
bition of the sitting member to do as much as some 
other man has done. ^ ^ ^ i have looked over the 
list of public buildings in the Province of Quebec, and 
I find that there are 12, 13 or 14 public buildings as 
regards w^hich I doubt if there has ever been any 
urgent demand upon the Government for their con- 
struction, otherwise than by the desire exhibited by 
the sitting member to have a public building. I think 
that is about the genesis of the public building. I 
have seen many of these buildings in Quebec and I 
suppose they are the same all over Canada and it bears 
the date of its erection and the name of the Minister 
prominently displayed; sometimes it bears the name 

^Mr. Foster — Can. Hansard, 1909-10, 1492. 

219 



THE CANADIAN BUDGETARY SYSTEM 

of the sitting member, and the expectation of the sit- 
ting member is that if he get a pubHc building he will 
consolidate himself in the constituency/ 

As a result of the importunities of members, uncalled 
for and unnecessarily expensive public buildings are 
frequently erected. 

The first thing a member elected to support the Gov- 
ernment thinks of is getting a public building or a wharf 
in his county, no matter whether that work is necessary 
or not, and he will put it in a place where he got a 
majority or where he expects to get one/ 

That is the misery of it. It is not what is adequate 
to the needs of the town, but it is that a member should 
have just as much as any other member. That is the 
sum and substance of the whole thing. It gratifies the 
political pride of a member to be able to say to his friends 
and supporters : 'T got you as good a thing" — no, not as 
good a thing, because that is the last idea which enters 
into his mind, but "as costly a thing as Annapolis got." ^ 

In case the erection of a public building is desired, 
pressure is brought to bear on the Department of Public 
Works, rather than the department for whose use the 
building is intended. 

Not once in a hundred times do the people, when they 
desire a public building erected for a post office, apply 
to the Postmaster General; they make their application 
to the Department of Public Works.* 

This system of erecting buildings without consulting 
the department directly involved has been severely 
criticised. 

It seems most extraordinary that the Minister of Pub- 
lic Works should go on spending money erecting post 

1 Mr. Monk — Can. Hansard, 1905, pp. 1101-1103. 

2 Ibid. — Can. Hansard, 1909-10, p. 3867. 

3 Mr. Foster — Can. Hansard, 1899, p. 8082. 

* Mr. Pugsley — Can. Hansard, 1909-10, p. 958. 

220 



POLITICAL EVILS 

offices and customs houses in different constituencies 
without any report from the Post Office or Customs De- 
partment that such buildings are required. I should 
think that a new practice ought to be adopted and that 
in every case there should be a requisition from the de- 
partment, for whose use the building is provided and 
such recjuisition should set forth the necessity of it/ 

It has been brought to the attention of Parliament 
that post offices are built in this country without the 
knowledge of the Postmaster General, and without con- 
sideration of the postal needs of the districts. The sys- 
tem now is that the Minister of Public Works receives 
petitions from his followers and if he deems it wise in 
the interests of the Liberal party in the district, he erects 
a post office without any regard to the proportion be- 
tween the income received from the place and the cost of 
the building. I believe that in the erection of post office 
buildings the Post Office Department should have a 
voice.^ 

The Minister of Public Works buttonholed by some- 
body puts in an appropriation of $20,000 or $25,000 for 
what he calls a post office in a place where today there is 
a postal revenue of $700 annually, and where the present 
postal accommodation is rented for exactly $38 a year. 
And when the Minister of Public Works is questioned he 
admits that no post office authority has told him that 
they need a post office in that place to carry on their busi- 
ness. Is not that a perfectly outrageous way of pro- 
ceeding? Is there any other sane legislative body in 
the world that would do that kind of thing? Who 
should be the judge of the necessity for a post office? 
The post office authorities themselves and nobody else. 
The Post Office authority is absent in Europe, his officers 
are present here, but neither he there nor one of his 
officers here has ever signed a scrap of paper asking for 
the erection of a post office in that town. There was 

1 Mr. Crockett — Can. Hansard, 1909-10, p. 968. 

2 Mr. Armstrong — Can. Hansard, 1909-10, p. 6683. 

221 



THE CANADIAN BUDGETARY SYSTEM 

another proposition brought into the House by the 
Minister of PubHc Works to build a new examining 
warehouse in the City of Quebec. It was to cost about 
$500,000. The Minister of Customs came into the 
House and it was brought out in the course of question- 
ing that the Minister of Customs had never asked for this 
building, that he absolutely knew nothing about it. '^' "^^ '^'^ 
These are not isolated cases, they are pattern cases. 
Over and over again this session and last we have cor- 
nered the Minister of Public Works in his appropriations 
for buildings, and we have had him admit time and time 
again that the Minister of Customs never asked for this 
and the Postmaster General never asked for that, and the 
departmental administrator knew nothing about it.^ 

Formerly public works were not undertaken by the 
Dominion government until full plans of the size and 
cost of the improvement had been prepared. 

1 have been in this House a good many years and have 
seen the Minister of Public Works in years gone by 
come here with plans and specifications and estimates 
when he wished to get money for a new building. That 
system is being departed from and we are asked to vote 
large sums of money on the mere statement of the Min- 
ister that he will decide afterwards vv^hat to do with it.^ 

The better course to pursue in matters of this kind is 
that which used to be followed some years ago by the 
department. The Minister should give the House the 
plans of the proposed building and more accurate esti- 
mate of the cost than my honorable friend, the Minister 
of Public Works has been able to give.^ 

In recent years, however, the practice has arisen of 
requesting parliamentary appropriations for public build- 
ing even before plans for the same have been prepared. 

In four or five cases this morning votes of $5, 000 or 

^ Mr. Foster, Can. Hansard, 1909-10, p. 1493. 

2 Mr. Cochrane — Can. Hansard, 1902, p. 722. 

3 Mr. Borden — Can. Hansard, 1903, p. 3045. 

222 



POLITICAL EVILS 

$io,cxx) have been asked for public buildings, and when 
we have asked if a site had been procured or if plans had 
been prepared, we have been answered in the negative. 
The department is in blissful ignorance as to what the 
cost will be, and we have to go it blind." 

No site has been chosen, no plans prepared, and no 
estimates made as to the cost, except that it will not 
exceed $15,000 or $20,000, that is all the information 
we can get." 

On account of this lack of precise information, the 

cost of erecting public buildings is often far greater than 

originally anticipated. 

I have in my mind cases in which some innocent look- 
ing estimates have come down for a few thousand dol- 
lars and the expenditure terminated in about ten times 
as much as it was expected the building was going to 
cost.' 

We have in this case a vote for $10,000. It goes to 
the public that this is all that will be voted for that pur- 
pose, and the electors never dreamed that in the end the 
cost may be perhaps $150,000.* 

The difficulty is that wdien coming before Parliam_ent 
and asking for a vote the statement is made by the 
Minister that a building is to cost only so much money, 
and then when complaint was made that it is costing- 
more, the answer is : "We have spent so much money and 
w^e must finish it." We had a glaring example of this in 
the Grande Vallee expenditure. In that case the first 
amount asked for was $5,000. It was supposed by the 
com^mittee that that was all that would be required, but 
the expenditure since has amounted to over $60,000.^ 

Whenever financial conditions have been favorable 
and have permitted an over-expenditure, a more or less 

1 Mr. Clarke — Can. Hansard, 1903, p. 13405. 

2 Mr. Borden — Ibid., p. 13028. 

3 Mr. Cochrane — Can. Hansard, 1903, p. 13044. 

4 Mr. Tisdale — Ibid., p. 13050. 

5 Mr. Fowler — Can. Hansard, 1903, p. 5830. 

223 



THE CANADIAN BUDGETARY SYSTEM 

wide divergence is to be found in the Dominion between 
the actual expenditures of the various governments and 
their anticipated outlays as submitted to their respective 
Parliaments. Whenever so inclined, the Administra- 
tion is in a position to exceed an estimate approved by 
the legislative branch. 

In this case, the Minister presiding over that de- 
partment told the Opposition that this work would 
cost $35,000. The Opposition allowed it to pass; 
$35jOOO was put in the estimates. Then, the following 
year, the Minister comes down and says: "We have 
exceeded the estimates; instead of spending $35,000, 
we have spent $84,000, or an increase of $49,000 on 
that one item." ^ 

It was not the custom to allow a contractor to com- 
mence dredging where there was only a vote of $50,- 
000, and go on and earn $150,000 without the money 
having been voted by Parliament. * >k ^ j can 
understand a small amount of over-expenditure, but 
here you have $150,000, you have expended three dol- 
lars for the one that Parliament has voted. ^ 

As regards public buildings, the Dominion govern- 
ment has frequently undertaken to erect more expensive 
structures than were authorized by Parliament. 

Last year the Honorable Minister obtained a sum 
to erect a public building, which was to cost $15,000 
and this year he asks us to vote $50,000 for that same 
building. If he had not spent any of last year's vote, 
I could understand his coming back and telling us 
that the plans were changed and asking for a larger 
vote, but when he decided to change the plans and 
erect a much more expensive building, he should have 
waited for the consent of this House to the change 
before spending the money.^ 

1 Mr. Bain — Can. Hansard, 1907-08, p. 5688. 

2 Mr. Sproule — Can. Hansard, 1907-08, p. 6960. 

3 Mr. Clancy — Can. Hansard, 1904, p. 533. 

224 



POLITICAL EVILS 

If we are to keep the Minister (of Public Works) 
and his department within bounds in the expenditure 
of pubhc money, we must insist that when the Minis- 
ter determines on the construction of a pubHc build- 
ing in any town or village, he must first determine 
how much money he can afford to spend upon it. I 
can see no difficulty in the Minister arriving at that 
conclusion. When he comes down with his first esti- 
mate, he should say exactly how much he proposes to 
expend, and we should have an understanding that 
the estimate w^ould not be exceeded by one dollar. 
"^ * * As a representative of the people of this coun- 
try, I contend that I have a right to say what amount 
should be expended on any public building, and no 
man who does not represent the people should come 
in and usurp the function that belongs to me in that 
regard; yet that is what has been done for years. It 
has not been the members of this House who have 
fixed the amount of the public expenditures; it has 
practically been the executive officers of the Public 
Works Department. * ^' * We cannot in this coun- 
try tolerate an executive officer who will day after 
day usurp the functions of Parliament by determining 
what the expenditure shall or shall not be on any 
public building. "^ 

The futility of voting estimates, which the Govern- 
ment can disregard at its pleasure, has been repeatedly 
commented upon. 

If the Minister conceals from the House the ex- 
penditures which he proposes to make, or goes on and 
makes expenditures to the tune of hundreds of thou- 
sands of dollars without the money having been voted 
and without there having been an}^ urgency, it is mak- 
ing a farce of appropriations. Thus the Minister 

1 Mr. Henderson — Can. Hansard, 1904, p. 636. 

225 



THE CANADIAN BUDGETARY SYSTEM 

seems to be becoming an appropriator, to absolve the 
House of its functions entirely."^ 

It was farcical to vote upon estimates when Parlia- 
ment had no guarantee that other and unauthorized 
expenditures would not be made. Experience had 
shown that year after year, although certain estimates 
were voted, the expenditures exceeded the estimates, 
and Parliament was never subsequently asked to 
ratify the over-expenditures at the ensuing session, 
and no guarantee was laid before Parliament that the 
over-expenditure was necessary. The actual result 
was that thousands of dollars had been expended 
which had never been voted or approved by Parlia- 
ment.^ 

The sums spent on public buildings in the Dominion 
instead of effecting a saving very often increase the gov- 
ernment's fixed charges for maintenance. A striking 
example of this is afforded by the next citation. 

Here is a list of about twenty places at each of 
v/hich a public building has been erected, and the 
aggregate cost of all these buildings is in the neigh- 
borhood of $600,000 to $650,000. What is the result? 
All the wants of the public service were formerly met 
in these places out of an annual expenditure of $1,578, 
whereas now we have to pay some $42,000 a year. 
Take the expenses of these public buildings. Each 
one must have a caretaker at about $400 per annum ; 
fuel $150; light $200; and interest $1,200. It will cost 
over $2,000 yearly to maintain each of these build- 
ings.' 

While large amounts are unprofitably expended on 
public buildings every year, the Government has cur- 

1 Mr. Foster — Can. Hansard, 1899, p. 5422. 

2 Mr. Cahan — Nova Scotia, House of Assembly Debates, 1892, 

P- 237- 

^ Mr. Bennett — Can. Hansard, 1907-08, p. 7184. 

226 



POLITICAL EVILS 

tailed its outlays in other directions and failed to grant 
the public certain desired facilities. 

While hundreds and thousands of people living 
back in our country places are asking for weekly, tri- 
weekly and daily mail routes, in order that they may 
have the visit of the mail carrier and communication 
with others, allowing them to do business, what is 
taking place under the management of this Govern- 
ment ? The revenues derived from the postal system 
of the country are being spent in unnecessary build- 
ings, costing $25,000 and more so that there is not 
sufficient revenue to aid in the development of the 
mail carrying routes in order that the people in the 
distant parts of the country may have the visit of the 
postal carrier more frequently than they do today/ 

In one of the oldest settlements in the Province of 
Ontario about ten miles from the City of Kingston, 
the residents have a mail service three times a week 
and for years they have been asking for a daily mail 
service the extra cost of which would amount to only 
$50 a year, and when I presented that petition to the 
Postmaster General I was told the Government did 
not have the money to spend for that/ 

In 1890 the Dominion House of Commons unan- 
imously passed the following resolution which had been 
introduced by a member of the Opposition but was ac- 
cepted by Sir John Macdonald, the leader of the Gov- 
ernment. 

Resolved, that in the expenditure of public money, 
the public interest, and not party favoritism, should 
control, and in the choice of places for the erection of 
public buildings for post offices, custom houses and 
inland revenue purposes, regard should be had to the 

^ Mr. Foster — Can. Hansard, 1909-10, p. 685. 
2 Mr. Edwards — Can. Hansard, 1904, p. 698. 

22y 



THE CANADIAN BUDGETARY SYSTEM 

amount of revenue collected, and to the public busi- 
ness done/ 

As a matter of fact the prmciple above set forth was 
never put into effect. 

Although the House led by the late Premier de- 
cided that no public buildings should be erected ex- 
cept where the public interests demanded yet the very 
first session afterwards, public buildings were erected 
where political interests were to be conserved/ 

More recently the rule has come into vogue that every 
county is entitled to at least one public building irrespec- 
tive of the size of the localities found within its confines. 

By a resolution that was adopted by this House in 
1 89 1, it was declared that, in the selection of a place 
where a public building should be erected, regard 
should be had to the revenue derived from it, and that 
preference should be given to the larger places. Now, 
there are counties in the Province of Ontario, which 
have no large town. ^ ^ ^^ Surely a county which 
has four or five smaller incorporated villages or towns 
is just as much entitled to one or more public build- 
ings as a county which has a large town.^ 

The general policy of the Government has not been 
changed in this respect from the past. It seems to 
have been the will of the majority of the House that 
at least in the chief town of a county there should be 
a public building erected.* 

Minister of Public Works: — It (post office build- 
ing) will cost $10,000. Mr. Clarke — Ten thousand 
dollars. In a place with postal receipts of only six 
hundred dollars. Minister of Public Works — Its be- 
ing the only (public) building in the county is the 

1 Mr. Mills' resolution — Can. Hansard, 1890, p. 1865. 

2 Mr. Landerkin — Can. Hansard, 1892, p. 2752. 

3 Mr. Henderson — Can. Hansard, 1900, p. 7918. 
* Can. Hansard, 1903, p. 13071. 

228 



POLITICAL EVILS 

only defense I can put in, aside from the population 
and the receipts/ 

Partisan Usages and Practices in the Provinces. 

Although not appearing in so acute a form, the political 
evils already described as affecting the workings of the 
Dominion budget system also occur in connection with 
the various provincial governments. None of the Prov- 
inces have introduced a civil service law as yet and ap- 
pointments to official positions are still governed by 
political considerations. Provincial patronage lists are 
also not unknown. 

We had in this Province the vicious patronage list, 
which destroyed good wholesome commercial compe- 
tition. ^ 'H ^ i^ led to a breach of trust on the part 
of those responsible for the administration of public 
affairs. If the Board of Directors of a commercial 
institution such as a bank were to make a preferred 
list, take a certain number of their shareholders, treat 
them differently from others, give privileges to those 
who supported them in their election to office, it 
would undoubtedly be regarded as a breach of trust. ^ 

When confederation was first formed, certain local 
public improvements were undertaken by the Provinces. 
In the course of time, however, the Dominion govern- 
ment has taken over these former duties of the Provinces 
and now carries out all public improvements of a cer- 
tain category no matter how small the expenditure in- 
volved may be. 

There was a time when the public works line was 
well defined. There was a time when the Fathers of 
Confederation and those who worked after them 

1 Hon. Mr. Sutherland, Minister of Public Works — Can. Hansard, 
1903, p. 428. 

2 Mr. Wilcox — Nova Scotia, House of Assembly Debates, 1908, 
p. 588. 

229 



THE CANADIAN BUDGETARY SYSTEM 

knew what the Hue was, where public works were 
performed by the Dominion, and wdiere they were 
held over for the Provinces. That line is absolutely 
obliterated, and toda}^ this Dominion Government 
does its public work service on the smallest rivers in 
any Provinces of the Dominion and even goes so far 
as to build bridges and the likes of that/ 

As a result of this encroachment by the Dominion 
government on the original field of activity of the Prov- 
inces, the only public improvements now undertaken by 
the local governments are the construction and better- 
ment of roads and bridges and the erection of public 
buildings for provincial purposes. Hence the oppor- 
tunities for wasteful and unproductive expenditures are 
somewhat circumscribed. Nevertheless, even if on a 
smaller scale, the same unwarranted and improvident ex- 
penditure of public funds to further party interests is 
to be found as in the case of the Dominion. Road and 
bridge moneys are frequently disbursed in such a way as 
to aid the Government side at election time. For ex- 
ample, the minority report of the Manitoba Public Ac- 
counts Committee for 191 1 called attention to the man- 
ner in which public money was spent on road improve- 
ments on the eve of the last general election. The in- 
tention was manifest to influence the elections in the in- 
terest of the Government candidates. Between June 
1st and July nth, 1910, when the general election took 
place, $150,000 of the provincial funds were paid out for 
work done on the public roads. After that date, how- 
ever, only a very small further expenditure was found 
necessary to keep the roads in order. Nor is this by any 
means an isolated instance. In another case, when a 

1 Mr, Foster — Can. Hansard, 1906-07, p. 5319. 

230 



POLITICAL EVILS 

general election occurred in Nova Scotia during the 
early winter, road work was started on a large scale in 
November although the ground was covered with from 
six to eight inches of snow at a time. 

In the Provinces public works patronage is often used 
as a means of providing a political campaign fund for 
the party in power. Thus in Manitoba, the officials of 
the administration preceding the present one in office 
entered into supplementary contracts for the construc- 
tion of the new Provincial Parliament building previous 
to a general election, which new contracts greatly en- 
hanced the profits of the contractors. In return the con- 
tractors made large contributions to the campaign fund 
of the Government party. In the case of the construc- 
tion of the Battleford Asylum, in Saskatschewan, the 
contractors were allowed to substitute cheaper materials 
than specified in nearly two hundred items practically 
without any deductions being made from the contract 
price. On these minor substitutions the contractors 
were enabled to make from $50 to $5,000 excess profits. 
Most of the arrangements for these substitutions were 
completed just before the provincial election of 19 12 and 
the supposition is strong that campaign fund contribu- 
tions were exacted in return. That such practices at 
the expense of the taxpayers should be connived at and 
that a provincial premier should openly defend bribery 
on the ground that it is necessary "to grease the palm 
of an Indian" at times, indicates a low standard of poli- 
tical morality in the Dominion. In the words of a 
prominent member of Parliament: 

I realize it to be too true that in Canada the public 
sense respecting Government expenditures is not so 

231 



THE CANADIAN BUDGETARY SYSTEM 

delicately and correctl}^ adjusted as it should be, and 
it frequently appears but like the voice of one crying 
in the wilderness to protest/ 

1 Mr. A. K. Maclean — Can. Hansard, 196, p. 352. 



232 



CHAPTER XIII 

DIVERGENCIES OF THE CANADIAN FROM 

THE BRITISH BUDGETARY SYSTEM 

AND THEIR RESULTS 

As explained at some length in the opening chapters, 
the Canadian colonies when first granted parliamentary 
institutions followed the practice which has prevailed in 
the xA^merican states and which existed in Great Britain 
previous to 1706. That practice was to allow each in- 
dividual legislator to pull at the public purse strings and 
introduce measures calling for the expenditures of gov- 
ernment funds. Under this method, no systematic plan- 
ning of government expenditure was possible and the 
public moneys were often unwisely and wastefully spent. 
To end this unsatisfactory state of affairs and to do away 
with the legislative scramble for appropriations so 
detrimental to the public interest, the English authorities 
decided to apply in Canada the same corrective which 
had proved so efficacious in the motherland. This con- 
sisted, as we have seen, in the introduction of respon- 
sible government. The right to introduce bills calling 
for the expenditure of public money was taken away 
from the individual members of the House of Commons 
and that body was forbidden to pass any vote appro- 
priating any part of the public revenue unless the same 
had been first recommended by the responsible ministers 
of the Government. 

However, the hopes entertained by the British officials 
that misapplication of pubHc funds would cease and good 
government be attained in Canada under their plan of 
responsible government have, as we have seen, been 

^Z2> 



THE CANADIAN BUDGETARY SYSTEM 

only partially realized. The system that produced such 
favorable results in Great Britain has failed to yield 
similar fruits when transplanted to Canadian soil. After 
an experience lasting for practically three-quarters of a 
century with responsible ministerial government, the 
operation of the Canadian financial system is still far 
from satisfactory. 

The reasons why these results have not been as satis- 
factory in Canada as in Great Britain are not difficult to 
determine. They consist partly in the failure of Canada 
to adopt certain of the essential features of the British 
political system; partly to the fact that in England cer- 
tain standards and fixed customs have grown up which 
have not developed in the Dominion; and partly to the 
circumstance that Canada, as an undeveloped but rapidly 
developing country industrially and commercially, has 
found it necessary to adopt a comprehensive system of 
public works constructed and controlled or subsided by 
the Dominion or provincial governments.^ 

Although in our consideration of the Canadian budge- 
tary system it has been necessary repeatedly to refer to 
these features, it is desirable, in this concluding chapter, 
again to make brief mention of them in order that there 
may be presented in one place those characteristics of the 
Canadian system which have prevented that country 
from securing under a budgetary system modelled closely 
upon the British system the efficient administration of 
financial affairs that obtains in Great Britain. Such a 
statement is of prime importance to the United States in 
the efforts now being made to work out a proper budge- 
tary system. 

^ Especially have the enormous aids which have been granted to 
the railways exerted an influence upon Canadian politics and finance 
which has not been felt in Great Britain. 

234 



DIVERGENCIES AND THEIR RESULTS 

Executive Control over Financial Legislation. The 

two features of the British system which are especially 
responsible for its successful operation are: (i) the 
dominating control exercised by the Executive over the 
ParHament in all matters of financial legislation; and 
(2) the guiding and controlling authority exercised by 
the Treasury, within the Administration, in matters of 
finance, — this guidance and control being exercised not 
only in the framing of the Estimates but in a continuous 
day-to-day supervision of expenditures. It has been 
seen that the British system of responsible parliamentary 
government has been adopted in Canada, and, as regards 
matters financial, the British doctrine rigidly applied 
that no supplies to the Crown m^ay be voted except upon 
recommendation of the Executive. In Chapter VII it 
was shown how strictly this principle is enforced. In 
England this rule has resulted in the practically com- 
plete elimination from the Estimates, and therefore from 
the appropriation acts of what in America have come to 
be termed "pork-barrel" items. In Canada, however, 
this beneficial result has not followed. This, therefore, 
is a matter which deserves explanation. 

As regards Great Britain it is first of all to be pointed 
out that there is in fact much less opportunity than there 
is in Canada for the granting of legislative favors to in- 
dividual members of the legislature. This is due to the 
two facts; that appointments to ofifice are strictly regu- 
lated by civil service laws; and that the Parliament is 
only seldom called upon to provide for public buildings 
or other public works which involve the expenditure of 
public money in the several parliamentary constituencies. 
And, where measures are introduced which are primarily 
for the benefit of particular localities they are designated 

235 



THE CANADIAN BUDGETARY SYSTEM 

as ''private bills" and subjected to a special procedure 
which is more efficient than is the Canadian procedure 
in guaranteeing the merit and public purpose of the pro- 
posed undertakings. 

In addition to these protective influences is the fact 
that the member of the British House of Commons 
occupies a pecuHar position with regard to the district 
which he represents. He is not necessarily a resident 
of his district ; in many cases he does not owe his nomi- 
nation to those who are to vote for him, nor does he need 
to look to them for renomination. 

The peculiar status which the member of the British 
House of Commons thus occupies is described and ex- 
plained by Lowell in his "Government of England" and 
this is not the place to dwell more fully upon it. It is 
sufficient to say that because of this status there has 
been made possible the development of an effective 
tradition or understanding that a member of the Com- 
mons is elected, not in order that he may represent the 
selfish interests of the particular locality which elects 
him but to support the national party to which he be- 
longs, and, through its control, to advance the general 
interests of the Kingdom and Empire. So great is the 
detachment of the private member from the particular- 
istic interests of his own constituency that it is con- 
sidered a gross impropriety for him to attempt to bring 
personal influence or other pressure to bear upon the 
Government in order to secure favorable action upon a 
measure in which the district which he represents is 
primarily and financially interested. It is of course 
proper for him to call attention to the manner in which 
his constituents would be affected, favorably or un- 

236 



DIVERGENCIES AND THEIR RESULTS 

favorably, by a proposed public law, but not that he 
should seek to obtain for them special favors. 

When, now, we turn to conditions that exist in 
Canada, we find a far different state of affairs. In the 
preceding chapter the extent to which expenditures or 
public moneys are influenced by political, partisan or 
local considerations has been pointed out. It is recog- 
nized that members of Canadian Parliament may with 
propriety importune the members of the Cabinet to have 
inserted in the Estimates items of expenditure which 
they especially desire and there is a tolerance of the 
practice upon the part of the ministers to yield to these 
solicitations. Here it is evident that there is no ques- 
tion of law or legislative standing order, but merely one 
of political morality. Because of the more abundant 
opportunity, the pressure upon Cabinet members is 
greater than it is in England, but the chief determining 
element is one of what has been termed "treasury con- 
science." This conscience is one which for its develop- 
ment to its present sensitiveness in England required 
several centuries, and it is not a matter of surprise that 
it should not operate so effectivel}^ in a new country like 
Canada. Its growth must take place, however, before 
this country can hope to have a system of financial ad- 
ministration which in its results will compare favorably 
with that of the mother country. 

Before leaving this subject, one further influencing 
fact should be pointed out. This is that the general 
character of Cabinet Government in Great Britain is one 
which intensifies political party discipline within the 
House of Commons and gives to the Executive corre- 
sponding dominating control in all matters of legisla- 
tion. These are features which sharply distinguish the 

^?>7 



THE CANADIAN BUDGETARY SYSTEM 

British system of responsible government from the 
forms, or at least from the modes of operation, of re- 
sponsible government found in other countries. The 
result is that members of the Government are able to 
assume towards private members of the legislature a 
position much more independent than they are able to 
take in countries where the legislature has not been will- 
ing to hand over to their leaders an equal degree of in- 
fluence and authority. If, then, in Canada, the future 
shall see an increasing influence and control vested by the 
Parliament in the leaders which it selects and maintains 
in office, it may be expected that these leaders will be led 
to lend a less ready ear to the requests of private mem- 
bers for special legislative favors. Though perhaps un- 
necessary, it may be pointed out that such a growth in 
executive control is desirable only when accompanied by 
a continued exaction of full political responsibility upon 
the part of the ministers for all pohcies pursued by them, 
and a full legal responsibility for all official acts com- 
mitted by them. It is the crown of the British constitu- 
tional achievement that this combination of executive 
power and responsibility has been so successfully main- 
tained. 

Treasury Control over Estimates and Expendi- 
tures. Equally marked among the failures of the 
Canadian Government to realize the good features of 
the British budgetary system is its failure to provide for 
vesting in its Treasury Department adequate control 
over the preparation of the Estimates and the expen- 
diture of funds by the spending departments. 

Under all systems of government it is necessary, and 
therefore the practice, that the estimates should be 

238 



DIVERGENCIES AND THEIR RESULTS 

founded upon statements of financial needs prepared and 
submitted by the heads of the several spending services. 
But, for reasons which were pointed out in the opening 
chapter of this report, it is essential, if due efficiency and 
economy are to be secured, that there should be some 
one agency which should have the authority to scrutinize 
objectively these departmental estimates, reduce them 
when thought proper and bring them into due proportion 
and relationship to one another, and, upon the expendi- 
ture side, to exercise a controlling day-to-day super- 
vision over all the expenditures of the spending depart- 
ments. And if this scrutiny and revision is to be im- 
partially and objectively done, it is practically necessary, 
for reasons inherent in human nature itself, that the 
agency through which it is done should itself not be a 
spending service, except of course as regards merely the 
salaries of its own clerical force. 

As evidencing the enormous value to Great Britain 
of the v/ork of its Treasury in this respect, a quotation 
may be made from the report on the System of Financial 
Administration of Great Britain. The commission 
which made that report, say : 

Only as it prosecuted its inquiries into the details 
of the manner in which the Treasury exercised its 
powers did it come to a realization that, important as 
is this power of the Treasury in respect to estimates, 
it constituted but one feature, one manifestation, as it 
were, of the far broader power that the Treasury has 
to supervise and control, not only all matters relating 
to the financial operations of the Government, but 
practically all matters of acquiring funds and prop- 
erty and all matters of incurring obligations — which 
may be called the business functions as distinguished 
from the public service activities of the Government. 

239 



THE CANADIAN BUDGETARY SYSTEM 

More and more, as its investigation proceeded, the 
commission had borne in upon it the fact that in the 
Treasury the British Government had a great organ 
of general administrative control ; that upon it fell the 
duty and responsibility for the final determination of 
what form of organization the several departments of 
the Government should have, what personnel was 
needed, what compensation should be paid, what new 
undertaking should be authorized, what changes 
should be made in the employment of funds as pro- 
visionally allotted by Parliament, what new grants 
Parliament should be asked to make, what the works 
program of the Government should be, etc.; that in 
discharging this function it was its duty to keep itself 
thoroughly informed regarding the conditions and 
needs of the several services and use its utmost en- 
deavor to see that the Government operations were 
conducted with the maximum of efficiency and econ- 
omy; that, in a word, the Treasury was the one au- 
thority to which Parliament and the public looked to 
see that public affairs were administered in an eco- 
nomical and efficient manner. 

The investigation also brought out another fact 
which the commission is sure has never been ade- 
quately appreciated by foreign students, namely, that 
these broad powers of the Treasury, instead of being 
exerted once a year when the estimates are brought 
under consideration, are exerted from day to day 
throughout the year. 

Still more important, the fact was developed that 
not only had the Treasury this important duty of act- 
ing as a general organ of administrative control, but 
this duty constituted practically its exclusive func- 
tion. It is difficult to overestimate the importance of 
this fact. Until it is appreciated one totally miscon- 
ceives the place of the Treasury in the British admin- 
istrative system. Misled by the name, the commission 

240 



DIVERGENCIES y\ND THEIR RESULTS 

began its inquiries under the impression that the Brit- 
ish Treasury corresponded to the Treasury Depart- 
ment of the United States Government, that to it was 
entrusted, as its primary duty, the management of 
the national finances, the collection, custody, and dis- 
bursement of the public revenues, and that its powers 
in respect to the framing of estimates were, so to speak, 
incidental to this duty. 

Nothing is further from the fact. It cannot be 
stated too emphatically that the British Treasury is, 
properly speaking, not a public service department at 
all. It has no public service duties of its own. Its 
functions are entirely auxiliary and controlling — 
restricted to looking after the financial and physical 
measures, and to the supervision and control of the 
activities of other departments. It thus stands in a 
class by itself as a service superior to, and in no sense 
coordinate with, the departments which render ser- 
vices direct to the public, properly speaking. In fact, 
it does not deal with the public; it does not collect the 
public revenues — this is done by the so-called "reve- 
nue" departments; it does not have the custody of the 
public funds — it has to secure ''credits" before it has 
any control over such funds; it does not audit public 
expenditures — that is done by the Comptroller and 
Auditor General; it does not administer the public 
debt — that is performed by a separate organ, the Na- 
tional Debt Commissioners. It is true that these sev- 
eral services are often spoken of and in a way treated 
as subordinate services of the Treasury, but their sub- 
ordination is practically the same as that of depart- 
ments which perform public services. * * * 

Once we grasp the fundamental status of the Brit- 
ish Treasury and the principle upon which its pov/ers 
rest, all difficulty in the way of understanding why 
the British system works so smoothly disappears.^ 

1 The Financial Administration of Great Britain, pp. 178-191. 

241 



THE CANADIAN BUDGETARY SYSTEM 

As contrasted with the work of the British Treasury 
thus described, we find in Canada that the Minister of 
Finance has hardly a shadow of effective supervising 
power. The original estimates are subject to the in- 
fluence of members of Parliament importuning the min- 
isters for expenditures w^hich will be of special benefit 
to the particular localities which they represent, and the 
appropriations, when made, are expended by the sev- 
eral departments and bureaus without any day-to-day 
supervision and control from the Minister of Finance. 

As regards, however, especially the matter of the 
framing of the Estimates it will be proper to quote with 
approval certain easily practicable improvements which 
were suggested by Sir George Murray in his report on 
"The Organization of the Public Service of Canada.'' ^ 
All of these suggestions, it will be observed, have as their 
purpose the increasing of the guiding and controlling in- 
fluence of the Ministry of Finance. Sir George says: 

By the control of appropriations I understand the 
methods which Parliament has prescribed for secur- 
ing that the funds which it grants for the various 
purposes of Government are applied to those purposes 
and to no other. This seems to me to be adequately 
provided for under the existing lav/, which is effect- 
ively carried out by the Auditor General. 

The control of expenditure may be considered from 
two points of view; there is the control exercised by 
the Government over its own Departments; and the 
control exercised by Parliament over the proposals 
of the Government. 

The latter may, I think, be regarded as negligible 
for the present purpose. In theory the control of 
Parliament over expenditure is complete; in practice 
it is of little value. This is partly due to the fact that, 

1 Sessional Paper No. 57a, 1912, p. 10. 

242 



DIVERGENCIES AND THEIR RESULTS 

as the Government must necessarily command a ma- 
jority in the House of Commons, it can generally 
secure the passing of its own estimates; and partly 
because, notwithstanding many professions of a desire 
for economy in the abstracts, Members will generally 
be found demanding increased expenditure for pur- 
poses in which their constituencies are interested, 
rather than reductions on items which do not fall 
under this category. 

In short, the control of public expenditure must 
depend almost entirely on the Government of the day; 
and here again we shall generally find that individual 
Ministers, while not unwilling to acquiesce in the 
reduction of the estimates of other Departments, are 
prima facie disposed to recommend increased expend- 
iture in their own. 

The Minister of Finance, who is responsible for 
raising the necessary taxation, is, therefore, as a rule, 
the only Minister who has a strong inducement to 
press for economy. 

The point of time at which he can use his influence 
with the best effect is while the estimates are under 
consideration and before they have been presented to 
Parliament. Proposals for expenditure which have 
passed this stage may be regarded in practice as un- 
Hkely to be. further amended except in the direction of 
increase. 

The system under which the estimates are at pres- 
ent framed, criticised, and presented does not appear 
to me calculated to promote economical administra- 
tion. 

They are drav/n up, in the first instance, by indi- 
vidual Ministers who are Hkely to be influenced 
largely by their own prepossessions, and by the pres- 
sure put upon them by Members of Parliament. 

The estimates so prepared are then subjected to the 
examination of the Department of Finance; but this 
examination, owing to pressure of time, has neces- 

243 



THE CANADIAN BUDGETARY SYSTEM 

sarily been of a somewhat cursory character, and di- 
rected rather to the totals of the votes than to the 
details. 

The final settlement is arrived at in Council, usually 
after oral discussion between Ministers. 

This method appears to me to be at once wasteful 
of the time of the Ministers and unlikely to result in 
effective control, which can only be secured by per- 
sistent criticism of details, carried on by means of 
written correspondence in the first instance rather 
than by oral discussion, and under conditions which 
permit of a thorough examination of the proposals. 

I suggest that the Department of Finance should be 
definitely charged with this duty. Every item of new 
or increased expenditures should be closely scruti- 
nized; and the Department proposing it should be 
called on to state in sufiicient detail the ground on 
which the expenditure is required; the reasons which 
prevent its being deferred to a later date; and the con- 
sequential expenditure which will be rendered neces- 
sary in future years if the proposal is sanctioned. 

I think it is important that these proceedings 
should be carried on in writing. Oral criticism in 
Council by the Minister of Finance, and oral replies 
by his colleagues are necessarily but imperfect meth- 
ods for either attacking or defending proposals made. 

Arguments which may sound plausible in debate 
often lose much of their force when subjected to the 
kind of criticism which is only possible in the light of 
full information and accurate statement of fact. 
Pledges given in conversation are apt to be forgotten 
afterwards, and it is always desirable to keep on 
record statements of fact or arguments used in de- 
fense of particular points of policy. 

Correspondence will, of course, take time; but there 
must be great inconvenience in the present system 
under which the examination of all the estimates must 
be concentrated in the short period which elapses be- 

244 



DIVERGENCIES AND THEIR RESULTS 

tween the date when they are forwarded to the De- 
partment of Finance and the date at which they must 
be submitted to ParHament. 

Proposals for increased expenditure are probably 
being framed in the Departments throughout the 
year; and it is not easy to see why they should not be 
submitted for the approval of the Finance Depart- 
ment, as and when they are matured. This would 
relieve the pressure in the period immediately before 
the estimates are presented to Parliament, and would 
enable many of the proposals to be considered with 
due deliberation. Any sanction given in the course of 
the year, would be provisional and subject to any modi- 
fication which might hereafter be found necessary when 
the final estimates for the ensuing year were under 
consideration. 

When the process of examination was completed 
the proposals for expenditure would be reviewed by 
the Minister of Finance; and those which were ac- 
cepted by him need not be considered again; those to 
which he raised objections not accepted by his col- 
leagues would be referred to the Cabinet for discus- 
sion by the whole body of Ministers. The Cabinet 
v/ould thus be relieved of an immense amount of 
discussion on the details of the estimates which is 
necessary under the present system, and would have 
to deal only with those points on which there was an 
irreconcilable difference of opinion between the Min- 
ister of Finance and one of his colleagues. 

Centralization of Responsibility for Expenditures. 

The fact that the several spending departments are able 
to determine what the aggregate yearly expenditures 
shall be and to keep the estimates of future outlays 
within proper limits has been deemed one of the con- 
spicuous merits of the English budget system. The 
British Cabinet is thus in a position to adopt a definite 

245 ^ 



THE CANADIAN BUDGETARY SYSTEM 

financial policy to which each individual minister must 
conform. A uniform course of action on the part of all 
the members of the Government is presupposed. In the 
case of Dominion ministers, however, this desired unity 
of policy as regards expenditures is frequently not at- 
tained. Attention has already been called to the fact 
that the Minister of Public Works often erects public 
buildings without consulting the department which is to 
occupy the edifice and without ascertaining whether its 
erection is really required in the public interest. This 
lack of coordination among the heads of the Administra- 
tion is manifested in various ways. 

On the question of transport you have the Minister 
of Public Works working, building harbors and 
dredging. You have the Minister of Railways and 
the Minister of Marine doing other portions of the 
work. And you will find the officers of these minis- 
ters working upon the same area and with regard to 
the same object but in entirely different ways. And 
so you have confusion, lack of system, lack of con- 
tinuity.^ 

The Minister of Finance says that much of the total 
sum voted will not be expended. My reply is that he 
has apparently no control over the Minister of PubHc 
Works or any other minister with respect to expendi- 
tures. The Minister of Finance should inform other 
ministers what he can permit them to spend each year. 
The reverse is the practice. That is part of the duties 
of the Minister of Finance. He is not merely a tax 
collector.^ 

At the outbreak of the European war, the Canadian 
department of militia was granted a special appropria- 
tion of fifty millions of dollars by the Dominion Parlia- 

1 Mr. Foster — Can. Hansard, 1910-11, p. 6605. 

2 Mr. A. K. Maclean — Can. Hansard, 1916, p. 939. 

246 



DIVERGENCIES AND THEIR RESULTS 

ment for national defense purposes. It was voted by the 
Cabinet that no payments were to be made out of this 
large credit until after the same had been approved by 
the Governor General in Council. These instructions 
were not obeyed, however, and the militia department 
spent a large portion of the appropriation in question 
without obtaining any orders in council therefor.^ 
After a lapse of two years, the Minister of Militia and 
Defense responsible for these expenditures was asked to 
leave the Cabinet on the ground, among other things, 
that he had disobeyed the express injunction about 
obtaining orders in council. On account of the interest- 
ing light which it throws on the manner in which the 
heads of the various Canadian government departments 
initiate expenditures without consulting other members 
of the Cabinet, the following extract from the corre- 
spondence between the Minister of Militia and the 
Canadian Premier preceding the former's resignation is 
worth quoting: 

I do remember your asking me on one occasion to 
submit Orders In Council, when possible, before 
incurring large expenditures, but the reason you 
assigned was not protest from my colleagues over my 
action, but that it was to set an example so as to assist 
to control others. You instanced the Post Office De- 
partment, the Railway Department, and the Public 
Works Department, where projects had been under- 
taken without Orders In Council, and I remember 
distinctly you stated that some boats had been pur- 
chased and other large expenditures incurred, without 
your knowing anything about it, and without any 
Order In Council.^ 

1 For details see Journals Dominion H. of Commons, Vol. LI, Part 
2, p. 15, et seq. 

2 Letter of Sir Sam Hughes to Sir Robert Borden of November il, 
1916, quoted in Montreal Daily Star of November 15, 1916. 

247 



THE CANADIAN BUDGETARY SYSTEM 

Under conditions like those just described, no sys- 
tematic restriction or planning of government expendi- 
tures would seem possible. Without the coordination 
of all departments, no fiscal policy can be successfully 
followed. 

The System of Governor General's Warrants. 

There can be no question that the system of Governor 
General's warrants under which expenditures can be 
made which have not been authorized by Parliament in- 
troduces a disturbing element in the effective working 
of a budgetary system. That it has also led to grave 
abuses in the past has been abundantly shown. Other 
governments have been able to administer their financial 
affairs without this feature and there would seem to be 
no reason why Canada could not do the same. 

The abolition of these special warrants would bring 
it about that legislative appropriations would be more 
nearly conformed to, and conditions would approach 
those of other countries where responsible parliamentary 
government exists. The anomaly could not then occur 
of a provincial government like that of Saskatchewan — 
after the local Parliament had voted five million dollars 
approximately for budgetary purposes in the fiscal year 
1914-15, — spending by means of special warrants $1,- 
140,478 ^ for items which had never appeared in the esti- 
mates submitted to the legislature. Such a gross vio- 
lation of parliamentary injunction as to maximum ex- 
penditure would become impossible. That it is perfectly 
feasible to keep government expenditures within the 
limits fixed by a budget needs hardly to be demonstrated. 
As an example of close conformity to budgetary direc- 

^ For details see Regina Leader of May 15, 1915. 

248 



DIVERGENCIES AND THEIR RESULTS 

tions, the case of Germany may be cited. Although the 
German Imperial budget aggregated $750,000,000 in 
round numbers in 19 10, the over-expenditure in the year 
named turned out to be only 0.31 per cent of the total 
sum voted in the budget. 

When the Quebec Opposition called the Administra- 
tion to account for having expended in the fiscal year 
191 1-12, $670,002 by means of special warrants and thus 
having caused a wide divergence between the budget 
authorized and the real provincial expenditure, the 
Government stated as a defence that it was impossible 
for the treasurer of a rapidly growing Province to esti- 
mate months in advance what sums would have to be 
spent for the conduct of public affairs. This can only 
be termed a lame excuse, however, for in England — 
where on account of the world-wide extent of the British 
Empire sudden and unforeseen contingencies are far 
more likely to occur — the British Parliament has not 
found it necessary to entrust the executive heads of the 
government with the power of issuing special warrants. 

You may have in your mind the case of the army 
and navy and the government of a great empire and 
the contingencies unforeseen and unprovided for 
nearly every session, but Parliament has considered 
all that in the Government of the Mother Country 
and Parliament there has declared that notwithstand- 
ing all that, there shall not be taken one farthing for 
any of these expenditures if the Appropriation Act 
does not make provision for these very purposes. And 
they take civil contingencies and the army and navy 
contingencies, and after having put in a list of the 
principal items that they can foresee, they put in a 
liberal amount for unforeseen or unprovided expendi- 
ture in connection with these important services, and 

249 



THE CANADIAN BUDGETARY SYSTEM 

the money is taken from no other sources and in no 
other way.^ 

That it is perfectly possible to conduct Canadian pub- 
lic affairs without resorting to Governor General's war- 
rants is evidenced by the fact that the warrants of this 
nature, issued by the Dominion Government between the 
years 1873-78, called for an aggregate expenditure of 
less than $200,000. The improper use of these warrants 
would doubtless be greatly checked if it were possible to 
require the Government to obtain from Parliament the 
passage of a bill of indemnity covering all sums expended 
without legislative authorization. 

It is not my intention at present to discuss the vari- 
ous remedies that might be adopted, short of striking 
this provision (concerning special warrants) entirely 
out of the Audit Act, and compelling the Government, 
as I think used to be done in similar cases, to apply to 
Parliament for a formal act of indemnity, when from 
any cause they are obliged to spend money without 
the authority of Parliament.^ 

Nevertheless, so long as Canadian ministries possess 
the right to use the public funds without a direct vote 
of the legislature, Parliament will always be threatened 
with a usurpation of its powers by the Executive. How 
great this danger actually is appears from the action of 
the new Dominion Administration in 1896, already de- 
scribed in a previous chapter. Although Parliament 
had stopped the supplies and had deliberately refused to 
vote certain salaries, its action was completely nullified 
and the Government officials received their accustomed 
pay for two full months by the authorities merely issuing 

1 Sir Charles Hibbert Tupper— Can. Hansard, 1896, 2d session, 
p. 692. 

2 Sir Richard J. Cartwright— Can. Hansard, 1891, p. 454i- 

250 



DIVERGENCIES AND THEIR RESULTS 

special warrants for the two million dollars thus re- 
quired. As we pointed out at the time : 

If a ministry were in power who would not be as 
honest as those holding office, and who would be more 
venal, and who had a sufficient majority to support 
them, whether right or wrong, they might ask Parlia- 
ment to vote only a million dollars and raise the other 
thirty-five millions by Governor-GeneraFs warrants 
on the plea of urgent need.^ 

In 1896, the Dominion Government defended its 
course in paying these salaries on the ground of public 
necessity and because the interests of the country would 
have otherwise suffered. British statesmen have held, 
however, that — even if a deadlock over appropriations 
should occur — it is clearly the duty of a constitutional 
government to look to parliamentary supplies alone for 
meeting the liabilities of the government. Thus, Earl 
Grey, when Secretary of State, instructed the Governor 
of British Guiana in a case where the legislature had 
failed to pass the annual supply bill that "he must strictly 
confine himself to his legal powers, and that those public 
services for which he was refused the means of pro- 
viding must be discontinued." In more detail, Earl 
Grey wrote : 

For my own part, I greatly regretted the certain 
increase of the difficulties of the colonists, and the 
great danger to their lives and property which might 
arise from their refusing to the Government the 
means of meeting the charges of the civil estabHsh- 
ment, including the police; but I did not think that 
those who were determined to proceed to these ex- 
tremities ought to be relieved from the consequences 
of their own conduct. On the contrary, I thought it 

^ Mr. Sproule — Can. Hansard, 1896, 2d session, p. y^y. 

251 -.-..^-.■.. 



THE CANADIAN BUDGETARY SYSTEM 

absolutely necessary that they should be made to feel 
that we (i. e. the Imperial authorities) would not 
flinch from the course that we had deliberately 
adopted, and that they must be prepared to meet the 
consequences of their own measures, of which the 
responsibility would rest solely on themselves. 

Upon this topic of special warrants it is pertinent to 
quote the recommendation made by Sir George Murray 
in his report on 'The Organization of the Public Service 
in Canada/' ^ 

In at least one respect the existing financial system 
seems to me unnecessarily rigid. Under section 41 of 
the ConsoHdated Revenue and Audit Act the Auditor- 
General is directed to see that no payment of any 
public money is made for which there is no direct 
parliamentary appropriation, or which is in excess of 
any such appropriation. 

The result of this provision is that (except during 
the parliamentary recess when special powers are 
available to meet urgent and unforeseen expenditure) 
no money can be spent on any service not specially 
provided for in the estimates, nor can the sum pro- 
vided for any service be exceeded. 

But it must occasionally happen, for example, that 
a public work for which specific provision has been 
made in the estimates, turns out in the course of the 
year not to be required, while some other work 
ejusdem generis proves to be urgently needed, or again, 
that the amount provided for a work turns out to 
be insufficient to complete it within the year, and 
the progress of the work has accordingly to be sus- 
pended until further supplies have been made avail- 
able. I think it would be reasonable, so long as the 
total provision under the vote was not exceeded, that 
there should be some means of supplying these defi- 

1 Sessional Paper, No. 57a, 1912. 

252 



DIVERGENCIES AND THEIR RESULTS 

ciencies; and that power might be given to the Min- 
ister of Finance on the application of a Department to 
authorize expenditure of a like kind to that already 
provided for in the estimates; or to authorize expendi- 
ture on a specific service in excess of the provision 
made. 

But in both cases the powder should be subject to the 
limitation that the total amount provided in the vote 
v^as not to be exceeded; and it should be clearly- 
understood that the power was not to be used except 
in really urgent cases. 

Expenditures in Excess of Appropriations. Atten- 
tion has also been called to the fact that individual de- 
partments of the Dominion government at times make 
expenditures in excess of appropriations granted to 
them. It is explained bv, the authorities of Canada that 
this is rarely deliberate but usually results from mistakes 
made in charging disbursements against paiti'^ular ap- 
propriation heads. That such mistakes can be mao'^ 
would indicate that either sufficient care is not taken by 
accounting officers in authorizing or making disburse- 
ments or that adequate means does not exist for holding 
such officers to a due accountability for the manner in 
which they discharge their duties. All such excess pay- 
ments are, however, reported to Parliament by the Audi- 
tor General. Parliament can thus take such action in 
respect to them as it sees fit. That the existence of such 
a system constitutes a defect in the Canadian system can 
hardly be doubted. 

Unexpended Appropriations. The British budget 
practice is to insert only such items in the Estimates as 
will be actually expended during the coming fiscal year. 
That this is the correct procedure has been aptly pointed 
out by a prominent Canadian member of Parliament. 

253 



THE CANADIAN BUDGETARY SYSTEM 

If the budget system has any virtues, estimates 
should only contain actual necessities and should 
represent actual intentions/ 

In the case of the Dominion, however, the Estimates 
are full of items which the Government has no intention 
of spending in the immediate future. Thus, in the fiscal 
year 1912-1913, $22,519,000 was voted in the Estimates 
for the Public Works Department. Of this amount 
$13,584,000 was actually spent and no less than $9,- 
135,000 not made use of. This practice of inserting 
items in the estimates which cannot possibly be expended 
is an unfortunate departure from correct methods of 
budget making. 

In all these items there is evidence of a practice 
which has grown up of voting a zv.m of money year 
after year without ^.ts being spent. I have said before, 
and I repeat, that I do not think it is a proper practice 
to continue voting money without a serious intention 
of spending it. If it is needed and we vote it, it ought 
to be spent. If it is not needed, this House should not 
be called upon to vote it.^ 

The Estimates which have been brought down pro- 
vide for an expenditure on consolidated fund account 
of $158,958,730.58. In the budget speech the minister 
of finance stated that he did not contemplate expend- 
ing $158,000,000, but only $125,000,000, if I under- 
stood him aright. Therefore to provide in the esti- 
mates for $33,000,000 more than you intend to expend 
is a very wrong practice.^ 

The Estimates are objectionable in that they do not 
show sufficient reduction. The Government replied 
that much of the money voted is but re-votes and will 
not be spent. * * ^ The Government has no right 

1 Mr. A. K. Maclean — Can. Hansard, 1916, p. 936. 

2 Mr. Sproule — Can. Hansard, 1902, p. 1002. 

* Hon. Sir Wilfrid Laurier — Can. Hansard, 1916, p. 854. 

254 



DIVERGENCIES AND THEIR RESULTS 

to ask Parliament to vote money which they say they 
will not likely expend. No other spending body is 
permitted to do this/ 

In reply to this protest on the part of opposition mem- 
bers to the Estimates of 191 6, one of the Dominion min- 
isters offered the following defense of the Government's 
course. Speaking of the retention of votes in the Esti- 
mates for new public buildings, he said : 

We are not going on with these public buildings 
while the w^ar continues, but we will retain the votes 
in the Estimates in the hope that we shall be able to 
go on with the work as soon as the war is over. Be- 
lieving as we do that it is in the public interest that 
these buildings should be erected, it would be ill ad- 
vised on the part of this Parliament to drop the items 
from the Estimates.^ 

On the other hand, grave objections are apparent to 
the policy of embodying an ambitious financial pro- 
gramme in the Estimates which the Government has not 
sufficient revenues to carry out. Not only do the Esti- 
mates fail then to afford a true criterion of what the 
Government's actual outlays are going to be, but the in- 
clusion within them of illusory items "prolongs the hope 
for unprofitable expenditures in the minds of many 
people and localities, and postpones the day when we 
should and must revise our policy upon public expendi- 
tures." ' 

Distinction between Capital and Revenue Accounts. 

In the public accounts and yearly financial statements 
submitted to the Dominion and Provincial Parliaments, 
the various items of expenditure are classified, as we 

1 Mr. A. K. Maclean — Can. Hansard, 1916, p. 936. 

2 Hon. Mr. Rogers — Can. Hansard, 1916, p. 2939. 

3 Mr. A. K. Maclean — Can. Hansard, 1916, p. 936. 

255 



THE CANADIAN BUDGETARY SYSTEM 

have seen, either under capital or under revenue 
accounts. No compelling reason has been advanced 
for the creation of such a distinction in a government 
expenditure. A private corporation is obliged to estab- 
lish a capital account in order to determine its net profits 
and the amount available for dividends to its share- 
holders from year to year. A state or municipality is, 
however, under no such necessity. It might be deemed 
proper for a commonwealth to charge to capital account 
all amounts invested in public undertakings susceptible 
of producing a steady net income like government rail- 
ways or telephone lines. But this has not been the case 
in Canada, where no uniform rule has been followed in 
regard to the items to be credited to capital account. 
Originally the idea appears to have been to so charge 
expenditures made upon public improvements of a per- 
manent nature and which did not entail any further out- 
lays when once completed. The practice now generally 
observed is to enter under capital account all unusual 
or one-time expenditures, such as moneys spent on so- 
called permanent road improvements or in gifts for 
famine or war relief purposes. 

In the description of capital and revenue accounts in 
the earlier portions of this treatise, the fact was em- 
phasized that this classification of government expendi- 
tures afforded an opportunity to juggle with the public 
accounts by shifting items from one column to the other 
and to hide the true state of the public finances. The 
possibility of such concealment puts a dangerous power 
in the hands of an unscrupulous administration and one 
not above misrepresenting actual conditions. For ex- 
ample, a government can easily show a surplus in its 
operation of a public utility by merely charging to capital 

, 256 



DIVERGENCIES AND THEIR RESULTS 

account ordinary renewal expenditures which should 
have been properly entered under operating expenses. 
In order to guard against such an improper showing, it 
was unsuccessfully proposed a number of years ago that 
the Dominion Auditor General be expressly directed to 
report to the House of Commons whenever "s. sum 
charged against a grant for capital account was ex- 
pended, wholly or in part, for a purpose properly 
chargeable to revenue account." 

We find, in passing the estimates every year, that 
large sums are granted on capital account. It is im- 
possible, when the estimates are before the House, 
however anxious gentlemen here may be to do their 
duty, to knovv^ whether the whole of that money is 
properly chargeable to capital or not. The Govern- 
ment obtains a grant for, say, half a million of money 
applicable to a certain line of expenditure, and to be 
charged to capital. For example, in the railway grants 
a sum of three or four hundred thousand dollars may 
be applicable to expenditure upon bridges, and half a 
million in some years has been granted on capital 
account for steel rails. Now, no one in this House, 
when the estimates are passed, can undertake to say 
absolutely how much of that should be capital and 
how much revenue. But when the accounts come 
before the Auditor-General, after the expenditure has 
taken place, the Auditor-General can tell that and 
can, by obtaining expert advice, know very closely 
indeed how much of that money should have been 
really charged to capital and how much to revenue. 
But as the statute has already been passed upon the 
estimates, making it all applicable to capital, he, as 
auditor, has nothing to do with it; all he can say is 
that $500,000 has been expended upon rails and $350,- 
000 upon bridges, and upon the Act w^hich was passed 
by Parliament he is directed to charge all to capital. 

257 



THE CANADIAN BUDGETARY SYSTEM 

Now, I say that the Auditor-General, while carrying 
out strictly according to his duty what Parliament 
has directed him to do, that is to charge that money 
up to capital, should be enabled and required to report 
to this House specially that it has come to his knowl- 
edge in the investigation of the accounts that a por- 
tion, perhaps all, of that which was so charged to 
capital ought really to have been charged to revenue 
account. Can anybody dispute that this is an im- 
portant feature of auditing? The Auditor-General 
cannot help us as the Audit Act stands. The esti- 
mates have been passed, they have become an act of 
Parliament. He is directed to charge a certain ex- 
penditure to capital, and he must obey, though he 
finds in the course of the year that the Government is 
renewing bridges with capital appropriation. If he 
were to report the fact to Parliament, we could see 
that sometimes half a million of money, that has been 
charged to capital and added to the debt of the coun- 
try, has enabled the minister of the day to show a 
profit of several hundred thousand dollars on the 
operation of the railway; and the result of the honor- 
able gentleman showing such profit, is that the appar- 
ent profit is issued to justify expenditure in other 
directions. Why should we not know the truth? . . . 
It may not matter to us whether the debt is incurred 
on capital account or whether we have had a deficit in 
the earnings of the railway, it is all a debt. But we 
do want to know whether the railway is being worked 
at a profit or at a loss, and it is a proper thing for that 
purpose that such a report as this should come from 
the Auditor-General to Parliament when he finds that 
the estimates, as they have been granted by Parlia- 
ment, are cloaking the truth.' 

As this proposed change in the Audit Act was never 
adopted by the House, neither the Auditor General nor 

1 Mr. Samuel Barker — Can. Hansard, 1904, p. 6618. 

258 



DIVERGENCIES AND THEIR RESULTS 

any other Canadian official examines into the question 
as to whether the amounts charged to capital accounts 
ought really to have been so charged. The Government 
is still able consciously or unconsciously to manipulate 
the public accounts in this respect. 

Another consequence of dividing government expen- 
ditures between capital and revenue accounts is that it 
has led to the weakening of parliamentary control over 
government outlays. As has been repeatedly reiterated, 
the underlying principle of all Canadian constitutions 
is that the people's representatives have the sole right to 
determine the government's expenditures and that none 
of the public money shall be expended by the authorities 
without the previous sanction of Parliament. Every 
proposed appropriation of public funds should appear, 
therefore, in the estimates of sums to be appropriated 
for the various government services and be considered 
and passed upon in the Lower House. In recent years, 
however, the tendency has been not to insert intended 
expenditures on capital account in the Estimates sub- 
mitted to Parliament and to withdraw such items from 
its direction and control. This is more especially true 
of the Provinces. 

Consider, for example, the expenditures of $150,000 
charged to capital account on bridges and culverts in 
Nova Scotia in the provincial fiscal year 191 3- 14. Very 
recently the Government there caused Parliament to 
pass statutes authorizing the expenditure of certain large 
amounts on bridges, road culverts and on other public 
services, and the borrowing of money for this purpose. 
In former times, the Administration would have an- 
nounced in the House of Commons that they proposed 

259 



THE CANADIAN BUDGETARY SYSTEM 

to expend out of borrowed moneys $150,000 upon 
bridges and culverts and the information would have 
been forthcoming- where and in what manner this sum 
was gomg to be spent. But nowadays the Government 
proceeds on the theory that this expenditure, like all 
others sanctioned by the passage of a general act and 
chargeable to capital account, is in a category by itself 
and does not have to undergo the scrutiny of the lower 
branch of the legislature. 

^ Hence, the executive authorities decide the amount to 
DC expended m any given year on the public services in 
question and the localities where it shall be disbursed 
Parliament is kept in ignorance of the particular road 
and bridge improvements to be carried out and of their 
probable cost. This diminishes the authority of the 
legislative branch of the government and illustrates 
anew the growing power of the Cabinet in the conduct 
of Canadian affairs. If there be any merit in a legisla- 
tive safeguarding of the people's money, this withdrawal 
of capital outlays on public improvements from Parlia 
nient's oversight and control must appear extremely re- 
gretable. And as the distinction between the capital 
and revenue accounts observed in Canadian public 
finance serves no good purpose but possesses a number 
of grave drawbacks, its total abolition is to be welcomed 
from whatever standpoint, viewed. 

Supplementary Estimates. As has been pointed 
out before, Canadian estimates are divided into main 
and supplementary estimates. Instead of supplemen- 
tary estimates being resorted to only on those rare 
occasions when it is necessary to provide for some totally 
unforeseen expenditure, they are in practice used to 

260 



DIVERGENCIES AND THEIR RESULTS 

cover a large percentage of the government's total 
outlays. 

For example, the Dominion estimates for the fiscal 
year 1913-1914 appropriated $143,213,815 in all. The 
main estimates contained $125,850,338 of this amount 
as against $17,361,477 in the supplementary estimates. 
Hence the main estimates, which are first submitted to 
the House of Commons and which were originally in- 
tended to indicate with some degree of exactitude what 
the total government expenditures during the coming 
fiscal year should be, have ceased to be a safe guide as 
to future government disbursements. What the ad- 
ministration really intends to spend cannot be ascer- 
tained now until after the various supplementary esti- 
mates have been passed. Besides proving an incentive 
to the slip-shod preparation of the main estimates, the 
employment of supplementary estimates on such a wide 
scale as is practiced in Canada tempts the Government 
to withhold from Parliament a complete statement of 
the country's financial needs and thus to show a sham 
economy. This is particularly true of election years. 

Lump Sum Appropriations. That it is the function 
of the appropriating authority to determine not only the 
sums of money which should be placed at the disposal of 
the Executive, but also the purposes or objects for which 
they may be spent, is without question. This duty is 
performed not only by insisting that no public moneys 
shall be expended without express legislative authoriza- 
tion, but by specifying, in the acts of appropriation, the 
specific purposes for which expenditures may be made 
and the maximum sums available for each. It is clear 
then, that by this power of itemization in the appro- 

261 



THE CANADIAN BUDGETARY SYSTEM 

priation acts there is placed in the hands of the legisla- 
ture a means whereby a control over executive expendi- 
tures may be carried to any conceivable limit. 

Unfortunately, however, this is a form of control 
which, if carried beyond a certain limit, is necessarily 
prejudicial to efficiency in the administration of the 
government. For, as does not need to be dwelt upon, if 
the hands of executive agents are too tightly bound, they 
have not the means of adjusting their acts to administra- 
tive exigencies as they arise from time to time and which 
cannot be foreseen by themselves and certainly not by the 
members of the legislature. It would seem then that if 
administrative efficiency is to be harmonized with legis- 
lative control of the purse, a golden mean must be secured 
as regards the details in appropriation acts which are 
made binding upon the spending authorities. 

The making of appropriations under general heads 
has undoubted advantages. Whenever this practice is 
resorted to careful provision should be made that the 
discretion thus given to expending authorities is not 
abused. A study of Canadian practice would indicate 
that such precautions are not adequately taken. 

Is it business-like to take a lump sum of $200,000, 
$300,000 or $400,000, covering a dozen different 
things, and put that through without any itemizing 
at all, a portion of it for other things and no division 
at all as to that amount which is properly referable to 
salaries or as to the amount which is properly refer- 
able to other operations and other things? In my 
time, we had some lump votes, but I would like my 
honorable friend to take an estimate of 1890, or from 
that up and compare it with the estimate now and he 
will find that the tendency has been to give lump 
votes. * "^ * I do hope, although it may be too much 

262 



DIVERGENCIES AND THEIR RESULTS 

to hope for, that succeeding estimates will show more 
sub-divisions so that we can define things a Httle more 
accurately. The ministers ought not to have too 
much power. It is a great temptation. If your back 
bencher comes to you and wants something and you 
can show him you have a special vote for that and 
your vote will not allow it you have an answer, but 
if he shows you a vote of $400,000 out of which you 
can take whatever you like for any purpose, you are 
shorn of an argument that I am sure the Minister of 
Agriculture must often wish to have."" 

The Canadian Government Railway estimates for 
1915-1916 furnish as good an illustration as any of the 
drawbacks of lump sum votes. The estimates allowed 
$13,000,000 for the working expenses of the Inter- 
colonial Railway and $650,000 for the operation of the 
Prince Edward Island Railroad without a single line of 
explanation. No attempt was made to classify this ex- 
penditure or to give Parliament any detailed information 
in regard to it. The Dominion House of Commons had 
no means of telling whether the appropriations asked for 
were really required or not, but had to accept the 
assurance of the Minister of Railways that the govern- 
ment railways could not be carried on efficiently unless 
the sums demanded were granted in full. 

In Great Britain this problem of harmonizing legis- 
lative control over expenditures with administrative dis- 
cretion is admirably met through the grouping of items 
in the appropriation acts under larger heads termed 
'Votes," which are true appropriations, and subordinate 
divisions termed ''subheads under which Votes' must be 
accounted for to Parliament," and providing that sums 
authorized under one "subhead" may be shifted, if 

1 Mr. Foster — Can. Hansard, 1909, p. 969. 

263 



THE CANADIAN BUDGETARY SYSTEM 

deemed expedient, for expenditures under another "sub- 
head." These ''vireinents'' must, however, in England, 
receive the approval of the Treasury, and the annual re- 
ports of expenditures to the Parliament must show them. 
It will be observed that this surrender of discretionary 
spending powers to the executive services is guarded not 
simply by a rigid accounting under the heads enumerated 
in the appropriation acts, but by a continuous controlling 
authority exercised by the Treasury over the acts of the 
several services. Except for this supervisory control 
the wisdom of granting such extensive discretionary 
power to the executive agents might be doubted. There 
is thus furnished an additional argument in favor of the 
establishment in any state of such an organ as Great 
Britain possesses in its 'Treasury." For, without it, it 
is not possible to harmonize so closely the conflicting re- 
quirements of responsible government and efficient pub- 
lic administration. 

Public Accounts Committee. In England, the 
Public Accounts Committee has been so constituted as 
to prove an efficient body of investigation into past gov- 
ernment expenditures. The opponents of the Admin- 
istration form the majority of the committee and direct 
what line or inquiry shall be pursued. At the committee 
hearings, party differences are laid aside, and both sides 
tmite in seeking to ascertain the real facts concerning 
the correctness of government expenditures. 

It (Public Accounts Committee) is the only com- 
mittee of the House of Commons on which I have 
ever sat, where there has been no party feeling. Mem- 
bers of both sides of the house apparently drop their 

264 



DIVERGENCIES AND THEIR RESULTS 

partisan feeling the moment they enter the committee 
room/ 

The knowledge that all the details will be brought to 
light in the Public Accounts Committee acts as a deter- 
rent on wasteful and extravagant government expendi- 
tures. In Canada, however, this deterrent is lacking. 
Little risk exists of any action of the Administration 
being thoroughly exposed in the committee. Its time 
is often taken up in unprofitable wrangling and any at- 
tempted inquiry more or less successfully blocked by 
the machinations of the friends of the Government who 
form a majority of the committee. Should, neverthe- 
less, certain damaging evidence be unearthed, a royal 
commission of inquiry is appointed with limited and 
carefully defined powers of investigation to supersede 
the work of the committee. A thorough-going and im- 
partial shifting of the facts in any case of improper gov- 
ernment expenditure rarely takes place in Canada. 

To overcome evils like those just described, it is neces- 
sary that the Canadian public accounts committees 
should be reconstituted on an entirely different basis. 
As now composed, they are entirely too large for efficient 
work in the case of both the Dominion and the larger 
Provinces. Their unwieldy size and partisan make-up 
gives rise to much wrangling when meetings are held 
and much precious time is thereby lost. The presence 
of newspaper reporters at the committee hearings affords 
notoriety-seeking members a chance to advertise them- 
selves and delays the committee from getting down to 
business. All these stumbling blocks could be removed 
if the Canadian public accounts committees were con- 

1 Captain Jessel — Hansard's Parliamentary Debates, 4th Series, 
Volume 179. 

26s 



THE CANADIAN BUDGETARY SYSTEM 

stituted in accordance with English precedents, which 
allow the Opposition to name both the chairman and a 
controlling majority of such committees and to direct its 
work as well. 

The proposal has been seriously urged in the past that 
all differences between the Auditor General and the 
Treasury Board in regard to government expenditures 
should be investigated by the Public Accounts Com- 
mittee. The reasons for this innovation has been stated 
as follows: 

I submit that it would be better that these questions 
be discussed in the Public Accounts Committee rather 
than brought in for discussion on the floor of Parlia- 
ment, which is the only other place we could discuss 
them. But in Parliament they would not be likely 
to receive the same attention as in the committee; it 
would not be possible to investigate the causes which 
led to the decision of the Treasury Board or the objec- 
tion of the Auditor-General with anything like the 
fullness that it is desirable these should be investi- 
gated. ... If we are to maintain the oflice of the 
Auditor-General in the form in which the statute de- 
clares and designs, I do not see how we can do it 
without having some discussion, either in this com- 
mittee or before some similar body where there are 
disputes between the Auditor-General and the Gov- 
ernment of the day. The Auditor-General is intended 
to be an independent officer. Now, if he has no kind 
of appeal from any decision made by the Treasury 
Board, the usefulness and independence of his office 
will be in a great measure destroyed. I think it is of 
the essence of the functions of the Auditor-General 
that when he raises an objection of this kind, the 
matter should be discussed and a decision arrived at 
which might govern him in future, saving the Gov- 
ernment and saving us a good deal of trouble in dis- 

266 



DIVERGENCIES AND THEIR RESULTS 

cussing these matters, which are often of a technical 
and somewhat complicated character/ 

Perhaps on the grounds recited below, this suggestion 
was never adopted. 

I do object to its being supposed that the Commit- 
tee on Public Accounts, by the reference of corre- 
spondence of this kind, is to be charged with the duty 
of trying the Government — and that is what it will 
have to do if it is to decide between the Auditor- 
General on the one side and the Treasury Board on 
the other. Let me call the honorable gentleman's 
attention to this fact that, time and again, in numbers 
of cases on record the British Government, in the 
British House of Commons, has distinctly declined to 
submit to a trial by a committee of the House as re- 
gards its conduct or administration as an Administra- 
tion. ... I do object to the committee undertaking 
to decide between the Auditor-General and the Gov- 
ernment, and the honorable gentleman will see the 
inconvenience of that course. In the first place, 
the Government is responsible to the House and is 
charged with the duty of giving the House the rea- 
sons and the justification for its action in each par- 
ticular case. If the committee undertake simply to 
hear the evidence of the Auditor General, they will 
decide on hearing one side only, otherwise it will be 
incumbent on all the members of the Government to 
appear before the committee on public accounts, as a 
tribunal to decide whether the Auditor General or the 
Government was right.^ 

General Political Conditions. The failure of Can- 
ada to secure a satisfactory administration of its financial 
afifairs notwithstanding the adoption of a budgetary 
system based on one which had given excellent results 

1 Sir Richard Cartwright — Can. Hansard, 1894, p. 2632. 

2 Mr. Davies — Can. Hansard, 1894, p. 2629. 

26j 



THE CANADIAN BUDGETARY SYSTEM 

in Great Britain is, however, not to be explained wholly 
by the fact that in certain respects it has not made its 
system conform to the one it followed as a model. In 
no small degree responsibility for its failure rests upon 
certain general political conditions that obtain in the 
Dominion. Our consideration of the budgetary situa- 
tion in Canada would therefore be incomplete without 
some further reference to these conditions. 

The Spoils System. It must be patent to all that 
no budgetary systems will result in real economy and 
efficiency in the administration of public affairs so long 
as a patronage system, such as flourishes in Canada, 
obtains, and government expenditures are made to fur- 
ther party interests. 

Politics enter every appointment (in the outside 
service), and politicians on the spot interest them- 
selves not only in the appointments but in subsequent 
promotions of officers. . . . Not only is the appoint- 
ment controlled by the politician in the first instances, 
but the promotion, the status the man shall occupy 
from time to time, his progress is guided by the hands 
of the politicians.^ 

I see before me the ex-Minister of Railways, and I 
well remember when a few years ago he practically 
defined his position as minister by stating that in the 
appointment of any man on the Intercolonial Rail- 
way, even down to the very navvies, he would take 
into consideration the interests of his party and not 
the welfare of the country.^ 

Take the whole system from the time that the 
tender is asked for until the work is completed, and 
everywhere, it is hampered, it is checked, it is made 
extravagant, it is made costly, it is made more often 

1 Report of Commission on the Civil Service — Quoted in Can. 
Hansard, 1907-08, p. 9206. 

2 Mr. Armstrong — Can. Hansard, 1907-08, p. 9172. 

268 



DIVERGENCIES AND THEIR RESULTS 

corrupt by the effect of the patronage which meets it 
at every turn and calls for its toll out of every part of 
the transaction, from the contractor dov^n through all 
the multitudinous supervisors and foremen and sup- 
ply givers. The patronage system is there and it per- 
forms its one function, w^hich is to make all v^orks 
more costly, which is often to cause the erection of 
unnecessary works at exaggerated cost, and which 
is always to vitiate in some form or another/ 

The introduction of civil service reform in the outside 
service and the elimination of the patronage system in 
all its forms would eradicate the evils just described and 
would also do much to further good government in Can- 
ada. Incidentally these reforms would materially help 
to lighten the labors of the Public Accounts Committee. 

If we should take that step (towards civil service 
reform), the duties of the Public Accounts Committee 
would be to a considerable extent done away with, 
because there would no longer be abuses in the de- 
partments of this Government, the exposures of which 
have taken up so much of the time of that committee.^ 

Political Partisanship. Important to be considered 
is the influence exerted by political partisanship. This 
is an evil which springs out of the general political stan- 
dards of those entrusted with political authority and the 
tolerance of those standards by the people generally, and 
not, primarily at least, from defects in the system of 
financial administration which Canada has adopted. 
For the real correction of the evil, one must, therefore, 
look to a change in the general attitude of the people and 
of their representatives with reference to the raising and 
expenditure of public funds. 

1 Mr. Foster — Can. Hansard, 1909-10, p. 2445. 

2 Mr. Armstrong — Can. Hansard, 1907-08, p. 9171. 

269 



THE CANADIAN BUDGETARY SYSTEM 

The treatment of public moneys as trust funds would 
help to prevent political considerations from determin- 
ing to the same extent as now what public works are to 
be undertaken. It has been suggested in Canada that 
all proposed public improvements be referred to an im- 
partial board or tribunal for examination and report. 

There ought to be a board in some way established 
before which all large claims for public expenditures 
of that kind should go for investigation and impartial 
report. Not that that board should have power to 
decide; the duty of the board should be to gather the 
information and give it impartially from a business 
standpoint in the form of a printed report and then 
the minister and the house could do what it pleased 
about it.^ 

But if an impartial body like that just described is to 
be in a position to enforce a sound policy concerning 
public improvements, it should possess the right to de- 
termine whether or not a given public work should be 
carried out on the proposed lines. In this way, it would 
be in a position to reduce all unwarranted and wasteful 
expenditures in the Public Works Department to a 
minimum. At the present time, pressure for improper 
expenditures is all concentrated on a single official, 
namely, the Minister of Public Works, who often finds 
it impossible to resist the appeals made by party heads 
for such outlays. If constituted along the right lines, an 
impartial revising board ought to prove more inde- 
pendent and less subject to partisan influences than a 
solitary minister. On account of its being an imper- 
sonal entity it should find less difficulty in rejecting un- 
w^orthy projects. 

1 Mr. Foster — Can. Hansard, 1910-11, p. 6604. 

270 



DIVERGENCIES AND THEIR RESULTS 

Lastly, the institution of such a board would render it 
impossible for members of the Dominion Parliament as 
now to participate in the preparation of the estimates by 
causing the insertion of items of expenditure to be car- 
ried out by the Public Works Department. The making 
of estimates on the request of members of Parliament 
would therefore cease. Consequently as it would tend 
to alleviate and remove certain of the existing evils of 
Canadian budget methods, the establishment of a re- 
viewing board for all public improvements could only be 
regarded as a step in the right direction. 

No Strong ^'Opposition." Canada, too, lacks the 
check on government extravagance afforded by the 
presence of a strong and numerous opposition party, 
which has contributed so much to the success of par- 
liamentary government in the motherland. Parties 
are far from being evenly balanced in the Dominion. 
In the provincial legislatures, the Opposition is 
frequently hardly represented at all. Thus a short time 
ago, the Opposition possessed but a handful of members 
in liberal British Columbia, and only two out of forty- 
eight members in conservative New Brunswick. In 
Quebec, all but five out of eighty-one members of the 
House of Assembly are supporters of the Government. 
In the case of the Dominion, the so-called Nationalists 
or French-Canadian representatives hold the balance of 
power between the Liberal and Conservative parties, and 
at the moment are affiliating with the latter side. But 
even where a more equal division of representation is to 
be found, no eft'ective opposition exists in the English 
sense for both the great parties are in accord in a policy 
of lavish government expenditures, and must divide the 

271 



THE CANADIAN BUDGETARY SYSTEM 

responsibility for the unjustifiable disbursement of pub- 
lic funds. 

We are extravagant in the disposition of our na- 
tional wealth and income for purposes that frequently 
are both unnecessary and unproductive and devoid of 
sound business principles. Both political parties must 
assume responsibility in this respect. "^ 

Equilibrium of Revenues and Expenditures. The 

British practice has been, generally speaking, to have 
tax laws expire with the end of the current fiscal year. 
As these taxes must, therefore, be re-imposed every 
twelve months, an opportunity is afforded annually to 
maintain an equilibrium between the revenues and the 
required expenditures of the government. Should the 
national income yield more than is required for this pur- 
pose, the next year will witness generally a reduction in 
the income tax or a lowering of some other form of levy. 
The necessity with which the English Government is 
confronted of having to submit at each session of Parlia- 
ment a new scheme of taxation serves in itself as a salu- 
tary check upon any superfluous or wasteful expenditure 
and is a powerful stimulus to economy. In Canada, 
however, practically no attempt is made to bring about 
an exact adjustment between revenues and expenditures. 
Laws relating to the collection of revenue are not re- 
enacted from year to year but, once introduced, remain 
in force until altered by further acts of Parliament. 
Thus, for example, if the Dominion receipts should show 
a large surplus over expenditures at a given period, no 
remission of tariff duties or change in any other form 
of taxation would ensue. 

Even when the government's revenue has been far in 

iMr..A. K. Maclean — Can. Hansard, 1914, p. 2486. 

2^2 



DIVERGENCIES AND THEIR RESULTS 

excess of requirements, a remission of taxation has 
seldom taken place in Canada.' Thus, in the fiscal year 
19 1 2-1 3, the receipts of the Dominion were one-half as 
large again as the total ordinary government expendi- 
tures. Despite the resultant surplus of fift3^-six millions 
of dollars, no downward revision of the existing rates of 
taxation occurred. 

In place of reducing taxation, the Canadian policy has 
been preferably to dispose of a surplus in government 
revenue by increasing the scale of public expenditure. 

The Government is more interested and concerned 
in devising means for the expenditure of the revenue 
than for providing the requisite revenue for necessary 
and legitimate expenditure. I remarked last year that 
it ordinarily was the function of a Government first 
to fix its budget of expenditures, and then to provide 
the revenue by taxation, but it is obviously the prac- 
tice of the Government to obtain all the revenue pos- 
sible and then to provide the means of spending it.^ 

We are reaching a peculiar position in this country 
in respect to finance. Ordinarily we first estimate our 
expenditure and afterwards provide ways and means 
to meet that expenditure. But things are being re- 
versed. We estimate our revenue and then we pro- 
ceed to find ways and means to expend that revenue; 
in other words, the Committee of this House, which 
has always been known as the Committee of Ways 
and Means has virtually become the Committee of 

^ The fact that the tariff rates are fixed in many cases primarily 
for purposes of protection and only incidentally for purposes of 
revenue, should be taken into consideration. Thus the retention of a 
large revenue-yielding item might be justified even though there were 
no need for the receipts obtained from it. Also to be taken into con- 
sideration is the fact that in England the bulk of the revenue has 
normally been raised by direct taxation, the returns upon which can 
be calculated with a fair degree of accuracy, whereas in Canada, the 
revenues come largely from excise and customs duties whose yield 
cannot be so closely foretold. 

2 Mr, A. K. Maclean — Can. Hansard, 1914, p. 2487. 

273 



THE CANADIAN BUDGETARY SYSTEM 

Supply, and the Committee of Supply has become the 
Committee of Ways and Means/ 

Hence, while in England the government's income is 
regulated each year in accordance with public require- 
ments, in Canada, until the outbreak of the war, it was 
the size of the receipts which determined how great the 
annual expenditures of the Dominion and provincial 
governments should be. Ample proof of this assertion 
is to be found in the financial statements of the Domin- 
ion Government. For example, the ordinary revenue 
increased between the fiscal years 191 1 and 1914 some 
forty-six millions of dollars. During the same period, 
the ordinary expenditures grew over forty millions of 
dollars. In 1914, $27,991,000 was spent on public works 
as contrasted with $11,807,000 in 191 1; $12,800,000 on 
the Post Office Department as against $7,954,000; $3,- 
084,000 on the Land Office instead of $1,617,000, and- 
$2,683,000 in aid of agriculture in place of $1,320,000. 
Elad it not been for the rapid augmentation of the 
national income during the period in question, it is safe 
to say that the greater part of such increased outlays in 
these and other government departments would never 
have been thought of. 

The same phenomenon of enlarged government re- 
ceipts entailing increased expenditures is to be observed 
in the Provinces. Thus the ordinary receipts of New 
Brunswick for the fiscal year 1914-1915 amounted to 
$1,634,079 or $68,329 more than had been originally 
estimated. This was counter-balanced by ordinary ex- 
penditures in excess of estimates amounting to $69,140. 
In the fiscal year 1912-1913, the receipts of British 
Columbia ran $2,533,000 ahead of the estimates. This 

1 Mr. A. K. Maclean — Can. Hansard, 1912-13, p. 10427. 

274 



DIVERGENCIES AND THEIR RESULTS 

led the authorities to swell their anticipated expendi- 
tures on public works alone by $1,432,000, Again, Que- 
bec's ordinary receipts in the fiscal year 191 3- 191 4 
turned out to be $1,597,000 more than was counted 
upon. This unexpected windfall was almost entirely 
ofifset by increased expenditures of $1,577,725 beyond 
the amount first proposed in the budget submitted to the 
Provincial Parliament. 

Since Canada is a rapidly growling country where 
government receipts are almost constantly mounting, re- 
trenchment is never in order under this policy of keeping- 
expenditures up to the limit of revenue. In fact, at 
times the government's receipts have increased so 
rapidly that new ways of spending it have had to be 
devised. Thus in the case of the Dominion, the Domin- 
ion government at first built wharves, piers and break- 
waters in the larger harbors and in the more important 
places along the seaboard. As the national revenues 
grew and more money became available for spending 
purposes, the original practice v/as extended and made 
to apply to all navigable waters, whether they were tidal 
estuaries, inland lakes, rivers or canals. So the Domin- 
ion government has come to embark on a policy of petty 
improvements and has built breakwaters costing as low 
as $300 and small wharves, where the expense involved 
is from $700 up and where no attempt even is made to 
collect wharfage dues. To the superabundant national 
revenue must also be ascribed, the more recent policy of 
the Dominion government of building at least one official 
structure in every county irrespective of the public needs 
or the size of the population, and which has led to the 
construction in small hamlets of post offices, costing as 
high as $30,000. 

27s 



THE CANADIAN BUDGETARY SYSTEM 

Growing Power of the Cabinet. Of late years the 
growing importance of the Cabinet and the diminishing 
role played by Parliament as an agency of criticism and 
control has attracted much attention. The Ministry de- 
termines the policy to be followed and the legislative 
branch is expected to approve it without adequate ex- 
amination or opportunity to impose political respon- 
sibility. In other words, parliamentary powers are 
being more and more assumed by the Governor in Coun- 
cil, that is, by the Cabinet. This attempted dimiinution 
of Parliament's prerogatives has been in progress for 
many years. The following quotations shed light upon 
the manner in which this movement is received in some 
quarters. 

The bottom principle in the Province of Ontario, 
in the old Province of Upper Canada, was responsible 
Government, and Parliament control over public ex- 
penditure. . . . That principle, this Government is 
endeavoring to subvert and overthrow. The first at- 
tempt in that direction after Confederation was made 
in the Province of Ontario in 1870, by John Sandfield 
Macdonald, he being then Prime Minister. He put 
through the legislature an Act appropriating $1,500,- 
000 in aid of railways, and placing that money in the 
hands of the Minister of the Crown to be expended 
by Order-in-Council without reference to the legisla- 
ture.^ 

If the money were spent in the ordinary way, we 
would be met each year with an estimate showing for 
what purposes the money was required; Parliamicnt 
could examine that estimate, and could refuse it if it 
saw fit. That is a safeguard. Then we place it year 
by year under the control of a responsible minister, 
and if the minister spends it, he accounts for it and he 

1 Mr. German — Can. Hansard, 1912-13, p. 9144. 

2^6 



DIVERGENCIES AND THEIR RESULTS 

is liable, if it is misspent. If he does not spend it, it 
does not remain in his hands; it has to be revoted the 
following year. That is a great safeguard. ... If it 
has been wrongly spent, it can be inquired into at the 
Public Accounts Committee, and the Government is 
responsible to Parliament." 

Instead of adhering to the system above outlined, a 
method of expenditure by Governor in Council is coming 
more and more into vogue in Canada. This is especially 
true of intended expenditures on capital account. Once 
such expenditures are authorized by the passage of a 
general act, they cease to be inserted in the estimates 
submitted to Parliamxcnt and are withdrawn from its 
further scrutiny and control. A very good illustration 
of this new practice occurred in Ontario, in 19 13, when 
the legislature voted that an appropriation of $5,cx)o,ooo 
to be used for the development of roads in northern 
Ontario should be expended by the Lieutenant Governor 
of the Province in Council. This encroachment by the 
Ministry on the prerogatives of Parliament has evoked 
considerable opposition at times. 

I have watched the trend of Parliamentary Govern- 
ment in Canada for some time, and it seems to me that 
there is a tendency on the part of all cabinets to arro- 
gate to themselves supreme power, not merely with 
respect to the administration of affairs, but wath re- 
spect to legislation in Canada. ... I protest against 
approving, day after day and week after week, the 
idea that a Cabinet are not only the administrators of 
affairs of the country, but are practically the sole 
legislators in Canada.' 

A striking example of the tendency of the Cabinet to 
center expenditures in its own hands occurred in 19 13, 

1 Mr. Guthrie — Can. Hansard, 1912-13, p. 9319. 

2 Mr. Emerson — Can. Hansard, 1912-13, p. 12018. 

277 



THE CANADIAN BUDGETARY SYSTEM 

when the Dominion ParHament was asked to vote a large 
appropriation to build additional vessels for the Cana- 
dian Navy. The Government proposed that this ex- 
penditure should be made in the following way : 

The proposal at this moment is to place $35,ocx),- 
ooo, which is not to be expended wathin a single year, 
under the control of the Government in reality, nomi- 
nally under the control of the Governor-in-Council, 
and this House has not an estimate, not a figure before 
it, upon which it is asked to vote the money. . . . 
The Government only proposes to give a detailed 
statement after the money is spent. ^ 

The practice of the British Government is to lay 
down a programme for the building of vessels which 
would take in the ordinary course, from two or three 
years, to build, and the Government does not ask the 
British Parliament to vote the total amount of the 
cost of these vessels at once; it only asks for the 
amount which it is expected will be expended during 
the coming year. . . . The British Parliament is 
jealous of the expenditure of public moneys, and with 
regard to no department is it more jealous than with 
regard to the army and navy estimates, over which it 
retains the right of discussion every year, when a vote 
is asked. ^ 

The logical sequence of the Dominion Government's 
standpoint was characterized as follows : 

If the argument of my right honorable friend means 
anything, it means that the money which is expended 
in this country can best be expended under the au- 
thority of the Governor-in-Council and not by respon- 
sible ministers. That, Sir, is going back in the history 
of Canada for seventy years. . . . We might just as 
well adopt the next five-years' expenditure for the 

1 Mr. Guthrie — Can. Hansard, 1912-13, p. 9319. 

2 Mr. Pugsley — Can. Hansard, 1912-13, p. 9325. 

278 



DIVERGENCIES AND THEIR RESULTS 

Transcontinental railway or for the Quebec bridge 
and let the Governor-in-Council do the spending, and 
give Parliament a detailed statement after the money 
is spent/ 

Provincial Subsidy System. Another desirable 
change which would further operate against laxity in 
state expenditures would be the discarding of the sys- 
tem of Dominion subsidies to the various Provinces. 
The insertion of a clause in the British North America 
Act requiring the Dominion government to pay annual 
subsidies to the Provinces embracing confederation 
marked a novel departure from the established rules 
usually followed in the drafting of a constitution for a 
proposed new commonwealth. Ordinarily, the accepted 
practice has been to require the local governments to 
contribute to the support of the central authority, should 
the latter find itself in financial difficulties, and to direct 
that any deficit in the national finances must be made 
good by contributions from the individual states com- 
posing the new entity. It was flying in the face of all 
precedent for the Canadians to adopt just the reverse 
policy and to require that their Dominion government 
should annually assist in lightening the financial burdens 
of the dififerent Provinces. 

As already explained, it was in order to overcome the 
opposition to confederation that the sponsors of the 
Dominion government idea felt constrained to abandon 
their original intention of placing the entire burden of 
financing local expenditures on the Provinces and to 
consent to a system of subsidies by the Dominion to the 
Provinces. When they agreed to this scheme, Canadian 
statesmen were governed solely by the question of ex- 

1 Mr. Guthrie — Can. Hansard, 1912-13, p. 9320. 

279 



THE CANADIAN BUDGETARY SYSTEM 

pediency. Instead of preventing any further spread of 
the subsidy evil beyond the amount first fixed by 
keeping the door closed to all further importuni- 
ties the line of least resistance has been followed and 
one demand after another of the Provinces has been 
acceded to. Roughly speaking, the annual subsidies now 
paid the nine Provinces by the Dominion amount to $i i,- 
500,000, which is ' nearly one-third of their ordinary 
yearly revenue. As already mentioned, the proportion 
varies from one-tenth in British Columbia to four-fifths 
of the total government income in Prince Edward Island. 
From the beginning of confederation and up to the close 
of the fiscal year 1916, the provincial subsidies have 
amounted to over $260,000,000. 

The bestowal by the Dominion of such large sums on 
the local governments is objectionable from the stand- 
point of correct budget procedure for several reasons. 
In the first place, the Dominion subsidies violate the 
sound constitutional and economic principle that the best 
way to check extravagance in public and private expen- 
ditures is to oblige those political units which spend 
funds of any description to furnish the proceeds with 
which to defray such outlays. Economy cannot be 
secured so long as those who spend mone}^ are not under 
the necessity of providing it. A good illustration of this 
is afforded by the Canadian practice of having the 
Provinces determine the number of judges in the higher 
courts whose salaries must then be paid out of the 
Dominion treasury. 

When you find one body creating judgeships, 
whose occupants are to be paid, not by their creators, 
but by another body altogether, it is natural that the 

280 



DIVERGENCIES AND THEIR RESULTS 

creating body not being checked by the consideration 
of the expense should be extremely liberal/ 

The granting of large Dominion subsidies has also de- 
layed the introduction of direct taxation in the Provinces, 
which would prove the best curb on extravagance as it 
would result in a more careful scrutiny of government 
expenditures. 

They (the people) say: ''the more we can get out of 
the Government the better for us" — just as if the Do- 
minion did not belong to them, and that it was not 
their money that was being spent. . . . The more 
money you give to the local Governments the longer 
you will prevent them from resorting to direct taxa- 
tion, and only in that case will the people realize 
where the money comes from and where it goes.^ 

Furthermore, the knowledge that the Dominion will 
help them out in case of necessity has caused the 
Provinces to be improvident in many instances and to 
postpone facing the responsibilities which they were in- 
curring for the future. Finally, the Canadian subsidy 
system has weakened the idea of self-help among the 
people and has retarded the growth of local self-govern- 
ment. For it is largely owing to the augmentation of 
their revenues by the Dominion subsidies that the Pro- 
vincial government has come to carry on public services 
and to initiate improvements which ought to have been 
looked after by the individual localities and the money 
provided from local sources as in the United States. 
Hence, if the system of Dominion subsidies should be 
entirely discarded, one of the serious imperfections of 
present Canadian budget systems would be done away 

1 Mr. Blake — Quoted in Can. Hansard, 1896, 2nd Session, p. 2569. 
- Mr. Foster — Can. Hansard, 1906-07, p. 5335. 

281 



THE CANADIAN BUDGETARY SYSTEM 

with. It is, however, recognized that there are constitu- 
tional and political considerations which may render im- 
possible or inadvisable this change even though it be one 
that is condemned upon general grounds of financial 
administrative efficiency. 



282 



APPENDICES 



APPENDIX I 

DEPARTMENT OF FINANCE ANI^ TREASURY 
BOARD ACT 

REVISED STATUTES OF 1906 

CHAPTER 23 

An Act respecting the Department of Finance and the 
Treasury Board 

SHORT TITLE 

1. This Act may be cited as the Department of 
Finance and Treasury Board Act. 

DEPARTMENT OF FINANCE 

2. There shall be a department of the Government of 
Canada, which shall be called the Departn^ent of Finance, 
over which the Minister of Finance and Receiver General 
for the time being, appointed by the Governor General 
by commission under the Great Seal of Canada, shall 
preside; and the said Minister shall ho^d office during 
pleasure and shall have the management and direction 
of the Department. R.S., c. 28, s. 2. 

3. The Department of Finance shall have the super- 
vision, control and direction of all matters relating to the 
financial affairs and public accounts, rc-venue and ex- 
penditure of Canada, which are not, or iA so far as they 
are not, by law, or by order of the Govefi^o^ in Council, 
assigned to any other department of t^e Government, 
and such other duties as are, from time tc^ time, assigned 
to it by the Governor in Council. R.S., c- ^^y s. 3. 

4. The Governor in Council may appc>i^^t an officer 
who shall be called the Deputy Minister of Finance and 
Receiver General, and such officers, clerKs and servants 
as are requisite for the proper conduct of the business of 

285 



THE CANADIAN BUDGETARY SYSTEM 

the Department, all of whom shall hold office during 
pleasure. R.S., c. 28, s. 4. 

5. The Deputy Minister of Finance shall, under the 
Minister of Finance, keep the accounts with the financial 
agents of Canada in England, and with the bank or 
banks receiving or paying public moneys, and the ac- 
counts of moneys paid for interest on Canadian stock, 
debentures or other Canadian securities. R.S., c. 28, s. 5. 

6. The Deputy Minister of Finance shall classify all 
appropriations of public moneys and keep posted up a 
book to be called the appropriation book, containing an 
account, under separate and distinct heads, of every such 
appropriation, whether permanent or temporary, enter- 
ing under each head the amounts drawn on account of 
such appropriation with the dates and names of the per- 
sons to whom payments are made ; and shall, under the 
Minister of Finance, keep the public accounts of Canada. 
R.S., c. 28, s. 6. 

7. All returns and statements required from savings 
banks, chartered or other banks, and all other institutions 
required to make financial statements or returns, shall, 
when no other provision is made in that behalf, be trans- 
mitted to the Deputy Minister of Finance. R.S., c. 
28, s. 7. 

8. All officers and clerks of and in the Department 
of Finance shall respectively have and perform such 
duties as are assigned to them by law or by the Governor 
in Council, or by the Minister of Finance, and such 
arrangements, distribution or union of the various 
duties, functions and business devolving on the several 
branches of the said Department, or such amalgamation 
thereof, may be made, as the Minister of Finance, with 
the approval of the Governor in Council, from time to 
time directs. R.S., c. 28, s. 8. 

TREASURY BOARD 

9. There shall be a board to be called the Treasury 
Board, consisting of the Minister of Finance and any 

286 



APPENDICES 

five of the ministers belonging to the King's Privy 
Council for Canada, to be nominated from time to time 
by the Governor in Council. R.S., c. 28, s. 9; 50-51 V., 
c. 13, s. I. 

10. The Treasury Board shall act as a committee of 
the King's Privy Council for Canada, on all matters re- 
lating to finance, revenue and expenditure, or public ac- 
counts, which are referred to it by the Council, or to 
which the Board thinks it necessary to call the attention 
of the Council, and shall have power to require from any 
public department, board, officer, or other person, bound 
by law to furnish the same to the Government, any ac- 
count, return, statement, document, or information 
which the Board deems requisite for the due perform- 
ance of its duties. R.S., c. 28, s. 9. 

11. The Minister of Finance shall be the Chairman 
of the Treasury Board; and the Deputy Minister of 
Finance shall be ex oificio the Secretary thereof, and 
through him the Board shall communicate with any pub- 
He department, officer, or other person. R.S., c. 13, s. 10. 

12. A plan of account books and accounts, adapted 
to the requirements of each department or branch of the 
public service, in order to exhibit in a convenient form 
the whole of the receipts and payments in respect of each 
vote, shall be designed under the superintendence of the 
Treasury Board; and the Governor in Council may, on 
report from the Treasury Board, prescribe, from time to 
time, the manner in which each department of the public 
service shall keep its accounts. R.S., c. 28, s. 11. 

13. The Treasury Board may direct any officer or 
person employed in collecting, managing or accounting 
for any branch of the revenue, to keep any books or ac- 
counts which it deems advisable to direct to be kept for 
the purpose of obtaining and furnishing any statistical 
information concerning the trade or commerce of Can- 
ada, the public works thereof, or other matters of public 
interest. R.S., c. 2S, s. 12. 



287 



APPENDIX 2 

CONSOLIDATED REVENUE AND AUDIT ACT 

REVISED STATUTES OF 1906 

CHAPTER 24 

An Act respecting the Public Revenue, the raising of 
Loans authorized by Parliament, and the auditing of 
the Public Accounts. 

SHORT TITLE 

1. This Act may be cited as the Consolidated Revenue 
and Audit Act. R.S., c. 29, s. i. 

INTERPRETATION 

2. In this Act, unless the context otherwise re- 
quires, — 

(a) 'public moneys,' 'public revenue' or 'revenue,' 
means and includes and applies to all revenue of the 
Dominion of Canada, and all branches thereof, and 
all moneys, vv^hether arising from duties of Customs, 
excise or other duties, or from the post office, or 
from tolls for the use of any canal, railway or other 
public work, or from fines, penalties or forfeitures 
or from any rents or dues, or from any other source 
whatsoever, whether such moneys belong to Can- 
ada or are collected by officers of Canada for or on 
account of or in trust for any province forming part 
of Canada, or for the Government of the United 
Kingdom, or otherv\^ise ;. 

(b) 'certify' includes 'examine and certify if found 
correct' ; 

(c) 'sub-accountant' means any officer or person re- 
ceiving or expending public moneys and accounting 

288 



APPENDICES 

for the same to or through any minister or officer 
of any public department ; 

(d) 'department,' when used in connection with the 
duty of preparing appropriation accounts, inchides 
every pubhc officer to whom the duties are assigned 
by the Treasury Board ; 

(e) 'accountant/ when used with reference to ac- 
counts, other than the appropriation accounts of the 
grants of Parliament, which the Auditor General 
is required by the Minister of Finance or the 
Treasury Board, under the authority of this Act, 
to examine and audit, means the department or 
officer that is required by the Minister of Finance to 
render the same. R.S., c. 29, ss. 2 and 51. 

3. Any offixer, functionary or person whose duty it 
is to receive any moneys forming part of the revenue, or 
who is entrusted wath the custody or expenditure of any 
such moneys, although he is not regularly employed in 
collecting, managing or accounting for the same, shall 
be subject to the provisions of this Act, so far as regards 
the accounting for and paying over such moneys, what- 
ever is the office or employment by virtue of which he 
receives, or is entrusted with the same. R.S., c. 29, s. 2. 

CONSOLIDATED REVENUE FUND 

4. All public moneys and revenue over which the 
Parliament of Canada now has the power of appropria- 
tion shall form one Consolidated Revenue Fund to be 
appropriated for the public service of Canada, in the 
manner and subject to the charges hereinafter men- 
tioned, and in the following order, that is to say: — 

First. — The costs, charges, and expenses incident to 
the collection, management and receipt thereof, subject 
to be reviewed and audited in such manner as is hereby 
or is hereafter by law provided; 

Second. — The salary of the Governor General ; 

Third. — The balance remaining unpaid of the prin- 
cipal, and interest at a rate not exceeding four per cen- 

289 



THE CANADIAN BUDGETARY SYSTEM 

turn per annum, of the loan of three milHon pounds 
sterHng, authorized by the Act passed in the thirty-first 
year of Her late Majesty's reign, chapter thirteen, to be 
raised for the purpose of constructing the Intercolonial 
Railway, upon the guarantee, by the Commissioners of 
Her late Majesty's Treasury, of the pa3^ment of interest 
on such loan at a rate not exceeding four per centum per 
annum ; 

Fourth. — An annual sum, at the rate of one per cen- 
tum per annum, as a sinking fund on the entire amount 
of principal money of the loan lastly hereinbefore men- 
tioned ; 

Fifth. — The principal and interest of any loan guar- 
anteed by the Treasury under the Act passed in the 
thirty-seventh year of Her late Majesty's reign, chapter 
two, and the Act of the Parliament of the United King- 
dom known as The Canada {Public Works) Loan Act, 

1873; 

Sixth. — Such sums as are required to form a sinking 
fund at the rate of one per centum per annum on the 
entire amount of the loan guaranteed by the Treasury 
as lastly hereinbefore mentioned; 

Seventh. — The yearly salaries of the judges of the 
Supreme Court of Canada and of the Exchequer Court 
of Canada. R.S., c. 29, s. 3. 

5. The grants payable to the several provinces con- 
stituting the Dominion of Canada shall be charged upon 
the Consolidated Revenue Fund of Canada, and payable 
out of any unappropriated moneys forming part thereof. 
R.S., c. 29, s. 4. 

PUBLIC DEBT AND THE RAISING OF LOANS AUTHORIZED BY 

PARLIAMENT 

6. The Governor in Council may, from time to time, — 
{a) make such regulations as he deems necessary for 

the management of the public debt of Canada and 
the payment of the interest thereon; and, 

290 



APPENDICES 

(b) subject to the provisions of the two next follow- 
ing sections, provide for the creation and manage- 
ment of a sinking fund or other means of securing 
the repayment of any loans raised under the 
authorit}^ of Parliament; and, 

(c) appoint one or more fiscal agents of Canada in the 
city of London, England, or elsewhere, and agree 
with them as to the rate of compensation to be 
allowed them for negotiating loans, and for paying 
the interest on the public debt, and for other services 
connected with the management of the said debt; 
and, 

(d) pay the sums necessary to provide such sinking 
fund or other means as aforesaid, and such compen- 
sation, out of the Consolidated Revenue Fund. 
R.S., c. 29, s. 5. 

7. Whenever, in any Act passed by the Parliament 
of Canada, authority is given to the Governor in Council 
to raise, by way of loan, any sum of money for the pub- 
lic service, or the security of Canada is authorized to be 
given for any sum of money deposited in any Govern- 
ment savings bank, or otherwise entrusted for safe- 
keeping to the Government of Canada, then, unless there 
is some provision to the contrary in the Act by which 
such authority is given, or such security authorized, 
such sum shall, in the discretion of the Governor in 
Council, be raised or such security given in one of the 
following ways, or partly in one and partly in another 
or others thereof, that is to say : — 

(a) By the issue and sale, or the delivery as such 
security, or debentures of Canada, which shall be 
in such form, for such separate sums, and at such 
rate of interest not exceeding six per centum per 
annum, and the principal and interest whereof shall 
be made payable at such periods and places, as the 
Governor in Council deems most expedient, and 
subject to such regulations as he sees fit to make; 

291 



THE CANADIAN BUDGETARY SYSTEM 

and such principal and interest shall be chargeable 
on the Consolidated Revenue Fund; 

(b) by the issue and sale or, the delivery as such 
security, of Canada Dominion stock bearing such 
rate of interest not exceeding six per centum per 
annum as is deemed most advisable, payable half 
yearly, the principal and interest whereof shall be 
chargeable on the Consolidated Revenue Fund ; and 
such stock shall not be redeemable until the time 
fixed b}^ the regulations hereinafter mentioned, but 
at and after that time shall be redeemable at the 
option of the Governor' in Council on giving six 
months' notice of such redemption, and the stock 
shall be subject to such regulations as to the inscrip- 
tion, transfer, management and redemption thereof, 
as the Governor in Council sees fit to make ; 

(c) By the granting of terminable annuities charge- 
able on the Consolidated Revenue Fund, such an- 
nuities being granted on terms in accordance with 
the most approved English tables, and based on a 
rate of interest not exceeding six per centum per 
annum, and subject to such regulations as the Gov- 
ernor in Council sees fit to make ; 

(d) By the issue and sale, from time to time, of ex- 
chequer bills or exchequer bonds, in sums of not less 
than four hundred dollars, in such form, and bear- 
ing such rate of interest not exceeding six per 
centum per annum, and redeemable at such periods 
and places as the Governor in Council deems most 
advisable, and subject to such regulations as he sees 
fit to make. R.S., c. 29, s. 6. 

8. Upon authorizing the issue of debentures of Can- 
ada or Canada Dominion stock under the last preceding 
section the Governor in Council may provide for a special 
sinking fund with respect to such issue, and may, at any 
time, provide for a general sinking fund for all such por- 
tions of the debentures or stock of Canada as have been 
or are hereafter issued without provision for a sinking 

292 



APPENDICES 

fund: Provided that the amount to be invested in any 
such sinking fund shall not exceed one-half of one per 
centum per annum on the amount of the debentures or 
stock to which it relates. R.S., c. 29, s. 6. 

9. The Governor in Council may from time to time 
direct that the whole or any portion of the stock of the 
Dominion of Canada, heretofore issued or inscribed, or 
hereafter issued or inscribed, and forming the whole or 
part of the public debt of Canada, be inscribed and trans- 
ferred in a register kept in the United Kingdom at such 
place and by such bank, colonial officer, or person as he 
from time to time appoints. 63-64 V., c. 11, s. i. 

10. The Governor in Council is hereby authorized to 
make any declaration and take any steps necessary to 
record such inscribed stock, or any portion thereof, 
under and in accordance with the provisions of the im- 
perial Acts known as The Colonial Stock Acts, I'^yy to 
1900. 63-64 v., c. II, s. 2. 

11. The Minister of Finance may, out of the Con- 
solidated Revenue Fund of Canada, pay, satisfy and dis- 
charge any judgment, decree, rule, or order of the court 
in England, which under the provisions of section twenty 
of The Colonial Stock Act, 1^77, is to be complied with 
by the registrar of the inscribed stock of Canada in Eng- 
land. 63-64 v., c. II, s. 3. 

12. The Governor in Council may, from time to time, 
as the interests of the public service require, change the 
form of any part of the then existing funded debt of 
Canada, including any debentures for which Canada is 
liable, by substituting one class of the securities afore- 
said for another or for such debentures, if neither the 
capital or the debt, nor the annual charge for interest is 
thereby increased: Provided that in any case in which 
four per centum Dominion stock or five per centum 
Dominion stock or debentures is or are substituted for 
securities bearing a higher rate of interest, the amount 
of the capital may be increased by an amount not exceed- 
ing the difference between the then present value of the 

293 



TPiE CANADIAN BUDGETARY SYSTEM 

security bearing the higher interest and that of the four 
per centum stock or five per centum stock or debentures 
substituted for it. 

2. No such substitution shall be made, unless the con- 
sent of the holder of the security for which another is 
substituted is obtained, or such security is previously 
purchased or redeemed by or on account of Canada. 

3. Such substitution may be made by the sale of the 
one class of securities and the purchase of those for 
which it is desired to substitute them. R.S., c. 29, s. 7. 

13. The Governor in Council may, from time to time, 
as the exigencies of the public service require, in the 
event of the Consolidated Revenue Fund being at any 
time insufficient to meet the charges placed thereon by 
law, direct the proper officer to raise, by temporary loans 
chargeable on the said fund, in such manner and form, 
in such amounts, for such periods not exceeding six 
months, at rates of interest not exceeding seven per 
centum per annum, as the Governor in Council directs, 
such sums as are necessary to enable the said fund to 
meet such charges. 

2. The sums to be raised shall never exceed the 
amount of the deficiencies in the Consolidated Revenue 
Fund to meet the charges thereon, then due or payable 
either as principal or interest, and shall be applied to no 
other purpose whatsoever. 

3. An account in detail of all such temporary loans 
shall be laid before the House of Commons within the 
first fifteen days of the session then next ensuing. R.S., 
c. 29, s. 8. 

14. If, at the end of any month, by reason of the 
amount of deposits in the savings banks established 
under the Savings Bank Act, and the issue and sale of 
the five per centum Dominion stock and any other public 
securities the issue and sale of which is authorized by 
this Act, or by any of the said causes, the amount of the 
public debt authorized by Parliament is exceeded, the 
Minister of Finance shall report such excess to the 

294 



APPENDICES 

Treasury Board, and the Treasury Board shall there- 
upon direct him to purchase, to the extent of such excess, 
debentures of the Dominion of Canada already issued, 
and such debentures shall then be cancelled, or may be 
held in reserve until there is authority to reissue them. 
R.S., c. 121, s. i8. 

15. The regulations made or to be made by the Gov- 
ernor in Council, as to the inscription, transfer, manage- 
ment and redemption of any Canada Dominion stock, 
debentures or other Canada securities hereinbefore 
mentioned, shall, in so far as they are not inconsistent 
with the Act under which they are made, have the same 
force and effect as if embodied and enacted in an Act of 
the Parliament of Canada. R.S., c. 29, s. 9. 

16. No officer of the Government of Canada em- 
ployed in the inscription, transfer, management or re- 
demption of any such stock or securities, or in the pay- 
ment of any dividend or interest thereon, shall be bound 
to see to the execution of any trust expressed or implied 
to which such stock or securities are subject, nor shall be 
liable in any way to any person for anything by him done 
as such officer, in accordance with any such regulation. 
R.S., c. 29, s. 9. 

17. The Deputy Minister of Finance shall, — 

(a) countersign all Canada debentures; 

(b) keep a debenture book, which shall contain a 
record and description of all debentures outstanding 
or authorized to be issued, showing the date of issue, 
period of redemption, when they were cancelled, and 
times of payment of interest, and an interest ac- 
count respecting them ; and, 

(r) keep a register of provincial notes or Dominion 
notes issued or cancelled. 

2. The Auditor General and the Deputy Minister of 
Finance shall examine and cancel debentures. Dominion 
or provincial notes, and other securities representing the 
debt of Canada and which have been redeemed. R.S., 
c. 29, ss. 10 and 11. 

295 



THE CANADIAN BUDGETARY SYSTEM 

1 8. Nothing in this Act shall be construed in altering 
or affecting the provisions of the Dominion Notes Act, 
or the debentures to be issued and held for securing the 
redemption of such notes, or in any way to authorize any 
increase of the public debt without the express authority 
of Parliament, except in the manner and to the extent 
hereinbefore provided in case of the substitution of four 
per centum Dominion stock or five per centum Dom- 
inion stock for other securities, and except also as to 
temporary loans raised in the manner and to the extent 
hereinbefore provided in the event of the Consolidated 
Revenue Fund being at any time insufficient to meet the 
charges placed thereon by law. R.S., c. 29, s. 12. 

COLLECTION OF THE REVENUE 

19. The Governor in Council may, from time to time, 
determine what officers or persons it is necessary to em- 
ploy in collecting, managing or accounting for the 
revenue, and in carrying into effect the laws thereunto 
relating, or for preventing any violation of such laws; 
and may assign their names of office, and such salaries 
or pay for their labour and responsibility in the execution 
of the duties of their respective offices and employments, 
as to the Governor in Council seems reasonable and 
necessary, and may appoint the times and manner in 
which the same shall be paid: Provided that no such 
officer so appointed shall receive a higher annual salary 
than is allowed in his case by any Act of the Parliament 
of Canada then in force respecting the Civil Service 
generally; nor shall any such salary be paid until voted 
by Parliament. R.S., c. 29, s. 13. 

20. The salary or pay allowed to any such officer or 
person as aforesaid shall be in lieu of all fees, allov/ances 
or emoluments of any kind whatsoever, except actual 
and authorized disbursements, shares or seizures, for- 
feitures and penalties. 

2. No such officer or person, receiving a salary at or 
exceeding the rate of one thousand dollars per annum, 

296 



APPENDICES 

shall exercise any other calling, profession, trade or em- 
ployment whatsoever, with a view to derive profit there- 
from., directly or indirectly, or shall hold any other office 
of profit whatsoever, except, in either case, with express 
permission of the Governor in Council. R.S., c. 29, s. 14. 

21. No officer or person regularly employed in the 
collection or management of the revenue, or in account- 
ing for the same, shall, while he remains such officer or 
so emplo3^ed, be compelled to serve in any other public 
office, or in any municipal or local office, or on any jury 
or inquest, or in the militia. R.S., c. 29, s. 15. 

22. Every person appointed to any office or employ- 
ment relative to the collection or management of the 
revenue, or to the accounting for the same, shall, upon 
his admission to such office or employment, take, before 
such officer as the Governor in Council appoints to re- 
ceive the same, an oath in the form following, that is to 
say : — 

*I, A. B., do swear to be true and faithful in the execu- 
tion, to the best of my knowledge and power, of the trust 
committed to my charge, by my appointment as , 

and that I will not require, take or receive any fee, per- 
quisite, gratuity or reward, or emolument, whether 
pecuniary or of any other sort or description whatever, 
either directly or indirectly, for any service, act, duty, 
matter or thing done or performed, or to be done or per- 
formed, in the execution or discharge of any of the duties 
of my said office or employment, on any account what- 
soever, other than my salary, or what shall be allowed 
me by law, or by order of the Governor in Council. So 
help me God.' R.S., c. 29, s. 16. 

23. The Governor in Council may, from time to 
time, — 

(a) make such divisions of Canada into ports, revenue 
districts or otherwise, as are required with regard 
to the collection or management of the revenue; and, 

(b) assign the officers or persons by whom any duty 
or service relative to any such purpose shall be per- 

u. 297 



THE CANADIAN BUDGETARY SYSTEM 

formed within or for any such district or division, 
and the places within the same where such duty or 
service shall be performed; and, 
(c) make all such regulations concerning such officers 
and persons, and the conduct and management of 
the business to them entrusted, as are consistent 
with the law, and as he deems expedient for carry- 
ing it into effect, in the manner best adapted to pro- 
mote the public good. 

2. Any general regulation or order made by the Gov- 
ernor in Council for any purpose whatsoever for which 
an order or regulation may be so made under the pro- 
visions of this Act, shall apply to each particular case 
within the intent and meaning of such general regula- 
tion or order, as fully and effectually as if the same had 
been made with reference to such particular case, and 
the officers, functionaries or persons concerned had been 
specially named therein. R.S., c. 29, s. 17. 

24. Every person employed on any duty or service 
relating to the collection or management of the revenue, 
by the order or with the concurrence of the Governor in 
Council, shall be deemed to be the proper officer for that 
duty or service; and every act, matter or thing required 
by any law in force to be done or performed by, to or 
with any particular officer nominated for that purpose in 
such law, which is done or performed by, to or with any 
person appointed or authorized by the Governor in 
Council to act for or on behalf of such particular officer, 
shall be deemed to be done or performed by, to or with 
such particular officer. 

2. Every act, matter or thing required by any law, at 
any time in force, to be done or performed at any par- 
ticular place within any division of Canada, made by the 
Governor in Council with regard to the collection or 
management of the revenue, which is done or performed 
at any place within such division, shall be deemed to be 
done or performed at the particular place so required by 
law. R.S., c. 29, s. 18. 

298 



APPENDICES 

25. Any officer or person employed in the collection, 
management or accounting for any branch of the 
revenue may be employed in the collection, management 
or accounting for any other branch thereof, whenever it 
is deemed advantageous for the public service so to em- 
ploy him. R.S., c. 29, s. 19. 

26. The Governor in Council may, from time to 
time, — 

(a) appoint the hours of the general attendance of the 
officers and persons employed in the collection and 
management of the revenue, at their proper offices 
and places of employment; and, 

(b) appoint the times during such hours, or the sea- 
sons of the year, at which any particular portions 
of the duties of such officers or other persons shall 
be performed by them respectively. 

2. A notice of the hours of general attendance so ap- 
pointed shall be kept constantly posted up in some con- 
spicuous place in such offices and places of employment. 
R.S., c. 29, s. 20. 

AUDITOR GENERAL AND HIS OFFICE 

2y. The Governor General may, for the more com- 
plete examination of the public accounts of Canada, and 
for the reporting thereon to the House of Commons, ap- 
point an officer, under the Great Seal of Canada, to be 
called the Auditor General of Canada, and such officer 
may be paid out of the Consolidated Revenue Fund, a 
salary of four thousand dollars per annum.^ R.S., c. 29, 
s. 2i;5i v., c. 7, s. I. 

28. The Auditor General shall hold office during good 
behavior, but shall be removable by the Governor Gen- 
eral on address of the Senate and House of Commons. 
R.S., c. 29, s. 22. 

29. The Auditor General shall be subject to the pro- 
visions of the Civil Service Superannuation and Retire- 
ment Act except as regards his tenure of office. 51 V., 
c. 7, s. 2. 

1 Since 1908, $5,000. 

299 



THE CANADIAN BUDGETARY SYSTEM 

30. The Governor in Council shall, from time to time, 
appoint the officers, clerks and other persons in the office 
of the Auditor General, and may regulate the numbers 
and salaries of the respective grades or classes into 
which the said offixers, clerks and others shall be divided. 
R.S., c. 29, s. 23. 

31. The Auditor General may, from time to time, 
make orders and rules for the conduct of the internal 
business of his office, and prescribe regulations and 
forms for the guidance of principal accountants and 
sub-accountants in making up and rendering their 
periodical accounts for examination: Provided that all 
such rules, regulations and forms shall be approved by 
the Treasury Board previously to the issue thereof. 
54-55 v., c. 16, s. I. 

32. The Auditor General may suspend or remove any 
of the officers, clerks and others employed in his office. 
54-55 v., c. 16, s. I. 

33. Subject to the provisions of the Civil Service Act 
with respect to promotions, the Auditor General may 
promote any of the officers, clerks or employees in his 
office, and shall have with respect to such promotions all 
the povv^ers which under the Civil Service Act are vested 
in heads and deputy heads of departments, and he shall 
also have in respect of promotions to chief clerkships, 
grade A, the powers by the said Act vested in the Gov- 
ernor in Council: Provided that every promotion of an 
officer, clerk or employee in the said office shall be re- 
ported to the Governor in Council within fifteen days 
after it has been made. 54-55 V., c. 16, s. i ; 3 E. VII., 
c. 9, s. 8. Repealed July 20, 1908 and the following sec- 
tion substituted: 

Subject to the provisions of The Civil Service Act with 
respect to promotions, the Auditor General may promote 
for merit any of the officers, clerks or employees in his 
office, and shall have, with respect to such promotion, all 
the powers which under The Civil Service Amendment 
Act, 1908, are vested in the Governor in Council acting 

300 



APPENDICES 

upon the recommendation of the head of a department 
and the report of the deputy head in regard thereto; 
provided that every promotion of an officer, clerk or 
employee in the said office shall be reported to the Gov- 
ernor in Council within fifteen days after it has been 
made. 

34. In any case in which the Auditor General deems 
it necessary to report for the information of the Gov- 
ernor in Council, such report shall be made through the 
Minister of Finance. 54-55 V., c. 16, s. i. 

PUBLIC MONEYS— HOW DEALT WITH 

35. All public moneys, from whatever source of 
revenue derived, shall be paid to the credit of the account 
of the Minister of Finance and Receiver General through 
such officers, banks or persons, and in such manner as 
the said Minister, from time to time, directs and appoints. 

2. All moneys received by any officer, clerk or em- 
ployee of the Senate or House of Commons of Canada 
as fees or sums in rtly way payable in connection with 
any proceedings before Parliament, or any Bills pre- 
sented to, or Acts passed by Parliament, or any copies 
of any such proceedings, Bills or Acts, shall forthwith be 
deposited by the accountant of either House to the credit 
of the aforesaid account in such bank as he from time to 
time designates ; and the moneys so deposited shall form 
part of the Consolidated Revenue Fund of Canada. 

3. Refunds, in whole or in part, of an}^ moneys re- 
ceived and deposited as provided in the last preceding 
subsection, and payments in connection with the said 
proceedings. Bills or Acts, directed to be made by the 
Senate and the House of Commons, or made in accord- 
ance with the rules and standing orders of either House, 
shall be payable out of the Consolidated Revenue Fund 
of Canada. R.S., c. 29, s. 25 ; 56 V., c. 8, ss. i and 2. 

36. The Treasury Board ma}^, from time to time, — 
(a) appoint the times and mode in which any officer 
or person employed in the collection or manage- 

301 



THE CANADIAN BUDGETARY SYSTEM 

ment of, or the accounting for any part of the reve- 
nue, shall account for and pay over the public 
moneys which come into his hands ; and, 
(b) determine the times and mode in which, and the 
officer by whom, any licenses on which any duty is 
payable are to be issued : 
Provided that such accounts and payments shall be ren- 
dered and made by such officers and persons respectively 
at least once every month. R.S., c. 29, s. 26; 51 V., c. 

37. The Minister of Customs, the Minister of Inland 
Revenue, the Postmaster General and all other ministers, 
and all deputy ministers, officers, clerks or persons 
charged with the receipt of public moneys, shall cause 
the gross revenues of their several departments or offices 
to be paid at such times and under such regulations as 
the Minister of Finance, from time to time, prescribes, 
to an account to be called the account of the Minister of 
Finance and Receiver General, at such bank or banks as 
are determined by the Minister of Finance, and daily ac- 
counts of such moneys so deposited shall be rendered to 
the Auditor General in such form as the Treasury Board 
prescribes. R.S., c. 29, s. 2^. 

38. Every officer of the Customs or of the Inland 
Revenue, and every officer otherwise employed in the 
collection of the revenue, rceiving money for the Crown, 
shall deposit the same to the credit of the account of the 
Minister of Finance and Receiver General, from time to 
time, in such bank as the said Minister appoints: Pro- 
vided that where such money is received at a place where 
there is no bank into which it can conveniently be paid, 
the same shall be paid over in such manner as the Min- 
ister of Finance directs; and accounts of such money 
shall be rendered to the Auditor General in such form 
as the Treasury Board prescribes. 

2. Every such officer shall keep his cash book written 
up daily. 

302 



APPENDICES 

3. All the books, accounts and papers of such officer 
shall, at all times during office hours, be open to the 
inspection and examination of any officer or person 
whom the Minister of Finance authorizes to inspect or 
examine the same. 

4. Daily accounts of the moneys so deposited shall be 
rendered to the Auditor General in such form as the 
Treasury Board prescribes. R.S., c. 29, s. 28. 

EXPENDITURE OF MONEY GRANTED BY PARLIAMENT 

39. When any sum of money has been granted to His 
Majesty by Parliament to defray expenses for any speci- 
fied public service, the Governor General may, from time 
to time, under his sign manual, countersigned by a mem- 
ber of the Treasury Board, authorize and require the 
Minister of Finance to issue out of the moneys in his 
hands, appropriated for defraying the expenses of such 
service, the sums required, from time to time, to defray 
such expenses, not exceeding the amount of the sum so 
voted or granted. R.S., c. 29, s. 29. 

40. When any sum of money has been granted to His 
Majesty by Parliament, to defray expenses for any speci- 
fied public service, and as soon as the Governor General 
has issued his warrant authorizing the payment of such 
sum or sums as are required to defray such expenses, the 
Minister of Finance may, from time to time, on the ap- 
plication of the Auditor General, cause credits to be 
issued in favour of the deputy heads, officers, clerks or 
other persons connected with the several departments or 
services charged with expenditure of the moneys so 
authorized. 

2. Such credits shall issue on the several banks au- 
thorized to receive public moneys. 

3. Statements in duplicate of moneys drawn for 
under such credits, together with the cheques paid by 
the banks in connection therewith, shall be rendered 
under such forms, and once in each month or more often, 
at such times as the Treasury Board directs, and one 
duplicate of such statement, together with the cheques, 

303 



THE CANADIAN BUDGETARY SYSTEM 

shall be rendered to the Auditor General, and the other 
duplicate to the Minister of Finance. 

4. The Auditor General, being satisfied of the cor- 
rectness of the statement, may request the Minister of 
Finance to cause cheques to be prepared to reimburse the 
banks for advances under such credits to cover the ex- 
penditures made or authorized. 

5. Such cheques shall be signed by the Minister of 
Finance and countersigned b}^ the Auditor General, or 
signed and countersigned by their respective deputies or 
officers thereunto duly authorized. 

6. No such credit shall issue in favour of any officer 
or other person in excess of any appropriation authorized 
by Act of Parliament. R.S., c. 29, s. 30. 

41. The Auditor General shall see that no cheque 
issues for the payment of any public money for which 
there is no direct parliament appropriation, or in excess 
of any portion of such appropriation, the expenditure of 
which has been authorized by the Governor in Council. 

2. The Auditor General shall report to the Treasury 
Board, through the Minister of Finance, any case in 
which a sub-accountant has expended money out of the 
proceeds of any accountable credit, for any purpose for 
which there is no legislative authority, or beyond the 
amount for which there is such authority, or for any 
other appropriation or purpose not connected with such 
credit. 51 V., c. 7, s. 4. 

42. No cheque for public money shall issue except 
upon the certificate of the Auditor General that there is 
parliamentary authority for the expenditure, save only 
in the following cases : — 

(a) If, upon any application for a cheque, the Auditor 
General has reported that there is no parliamentary 
authority for issuing it, then upon the written 
opinion of the Minister of Justice that there is such 
authority, citing it, the Treasury Board may au- 
thorize the Deputy Minister of Finance to prepare 
the cheque, irrespective of the Auditor General's 
report ; 

304 



APPENDICES 

(b) If, when Parliament is not in session, any ac- 
cident happens to any pubhc work or building which 
requires an immediate outlay for the repair thereof, 
or any other occasion arises when any expenditure, 
not foreseen or provided for by Parliament, is 
urgently and immediately required for the public 
good, then upon the report of the Minister of 
Finance that there is no parliamentary provision, 
and of the minister having charge of the service in 
question that the necessity is urgent, the Governor 
in Council may order a special warrant to be pre- 
pared, to be signed by the Governor General for the 
issue of the amount estimated to be required, which 
shall be placed by the Minister of Finance to a 
special account, against which cheques may issue 
from time to time, in the usual form, as they are 
required. R.S., c. 29, s. 32; 51 V., c. 7, s. 5. 

43. If the Auditor General has refused to certify that 
a cheque of the Minister of Finance may issue, on the 
ground that the money is not justly due, or that it is in 
excess of the authority granted by Council, or for any 
reason other than that there is no parliamentary au- 
thority, then upon a report of the case prepared by the 
Auditor General and the Deputy Minister of Finance, 
the Treasury Board shall be the judge of the sufficiency 
of the Auditor General's objection, and may sustain him 
or order the issue of the cheque in its discretion. R.S., 
c. 29, s. 32. 

44. The Auditor General shall, in all cases mentioned 
in the two sections last preceding, prepare a statement 
of all such legal opinions, reports of council, special war- 
rants and cheques issued without his certificate, and of 
all expenditures incurred in consequence thereof, which 
he shall deliver to the Minister of Finance, who shall 
present the same to Parliament not later than the third 
day of the session thereof then next ensuing. R.S., c. 
29, s. 32. 

305 



THE CANADIAN BUDGETARY SYSTEM 

45. No payment shall be authorized by the Auditor 
General in respect of work performed, or material sup- 
plied by any person in connection with any part of the 
public service of Canada, unless, in addition to any other 
voucher or certificate which is required in that behalf, 
the officer, under whose special charge such part of the 
public service is, certifies that such work has been per- 
formed, or such materials supplied, as the case may be, 
and that the price charged is according to contract, or if 
not covered by a contract, is fair and just. R.S., c. 29, 
s. 33. 

ACCOUNTS AND AUDIT OF ACCOUNTS 

46. The public accounts of Canada shall be kept by 
double entry in the office of the Ministry of Finance. 

2. An annual statement shall be prepared as soon as 
possible after the termination of each fiscal year ex- 
hibiting, — 

(a) the state of the public debt and the amount charge- 
able against each of the public works for which any 
part of the debt has been contracted ; 

(b) the state of the Consolidated Revenue Fund and 
the various trusts and special funds under the man- 
agement of the Government of Canada; 

(c) such other accounts and matters as are required 
to show what the liabilities and assets of Canada 
really are at the date of such statement. R.S., c. 
29, s. 34. 

47. The capital represented by deposits in the savings 
banks in Nova Scotia and New Brunswick, in deposit 
accounts as to which there have been no deposits or with- 
drawals since the first day of July, one thousand eight 
hundred and sixty-seven, shall not be charged against 
those provinces respectively as part of the debt with 
which they entered the Union, but all such accounts shall 
be transferred to a suspense ledger, and if any deposit or 
withdrawal is made in any such account, it shall be 
removed from the suspense ledger, and the capital 
represented by such account, and the interest accrued 

306 



APPENDICES 

since the first day of July, one thousand eight hundred 
and sixty-seven, shall be charged against Nova Scotia or 
New Brunswick, as the case may be. R.S., c. 121, s. 21. 

48. The Minister of Finance shall cause an account 
to be prepared and transmitted to the Auditor General 
on or before the thirtieth day of June in every year, 
showing the issues made from the Consolidated Revenue 
Fund in the fiscal year ended on the thirty-first day of 
March preceding, for services directly under his control. 

2. Such accounts and the reports of the Auditor Gen- 
eral thereon shall be laid before the House of Commons 
by the Minister of Finance on or before the thirty-first 
day of October next, following, if Parliament is then 
sitting, or if not sitting then within one week after Par- 
liament is next assembled. 51 V., c. 7, s. 6: 6. E. VIL, 
c. 12, ss. I and 3. 

49. The Deputy Minister of Finance shall prepare 
and submit to the Minister of Finance the public accounts 
to be annually laid before Parliament. R.S., c. 29, s. 36; 
51 v., c. 7, s. 7. 

50. The public accounts shall include the period from 
the first day of April in one year to the thirty-first day of 
March in the next year, which period shall constitute the 
fiscal year; all estimates submitted to Parliament shall 
be for the services coming in course of payment during 
the fiscal year; and all balances of appropriation which 
remain unexpended at the end of the fiscal year shall 
lapse and be written ofif : Provided that upon cause being 
shown to the satisfaction of the Governor in Council, he 
may, by order in council to be made before the first day 
of May in each year, extend the time for finally closing 
the account of any appropriation, for a period of not 
more than three months from the end of the fiscal year, 
after the expiration of which extended time, and not be- 
fore, the balance of such appropriation shall lapse and 
be written ofif. 6 E. VIL, c. 12, s. 2. 

51. On or before the thirtieth day of June in every 
year, accounts of the appropriation of the several supply 

307 



THE CANADIAN BUDGETARY SYSTEM 

grants comprised in the Appropriation Act, or in any 
other Act, for the year ending thirty-first March then 
last, shall be prepared by the several departments and be 
transmitted for examination to the Auditor General and 
to the Deputy Minister of Finance, and, when certified 
and reported upon, as hereinafter directed, they shall be 
laid before the House of Commons; and such accounts 
shall be called the appropriation accounts of the moneys 
expended for the services to which they respectively 
relate. 

2. Each of such accounts shall be examined under the 
direction of the Auditor General, by such officer or clerk 
in his ofiFice as he directs ; and such officer or clerk shall 
certify to the due examination of such account, and the 
Auditor General shall certify that the account has been 
examined under his direction and is correct. 51 V., c. 
7, s. 8; 6 E. VIL, c. 12, ss. i and 3. 

52. The department charged with the expenditure of 
any vote under the authority of the Governor in Council, 
shall prepare the appropriation account thereof. 51 V., 
c. 7, s. 8. 

53. The department charged with the duty of pre- 
paring the appropriation account of a grant shall trans- 
mit to the Auditor General, together with the annual ap- 
propriation account of such grant, a balance sheet so 
prepared as to show the debit and credit balances in the 
ledger of such department on the day when the said ap- 
propriation account was closed, and also so prepared as 
to verify the balances appearing upon the annual appro- 
priation account. 

2. Any balances outstanding in the hands of any per- 
son or persons unexpended or unaccounted for at such 
period shall be accounted for and settled as soon there- 
after as is practicable, but not later than the termination 
of the next succeeding fiscal year. 51 V., c. 7, s. 8. 

54. The Treasury Board may alter the time at or to 
which any accountant for public moneys, public officer, 
corporation or institution, is required to render any ac- 

308 



APPENDICES 

count or to make any return, whenever in its opinion 
such alteration will facilitate the correct preparation of 
the public accounts or estimates for the fiscal year. 
R.S., c. 29, s. 41. 

55. The deputy heads of the several departments or 
the officers, clerks or other persons charged with the ex- 
penditure of public moneys, shall respectively audit the 
details of the accounts of the several services in the first 
instance, and be responsible for the correctness of such 
audit. R.S., c. 29, s. 42. 

56. Every appropriation account, when rendered to 
the Auditor General, shall be accompanied by an ex- 
planation showing how the balances on the grants in- 
cluded in the previous account have been adjusted, and 
shall also contain an explanatory statement of any excess 
of expenditure over the grants included in such account ; 
and such statement, as well as the appropriation account, 
shall be signed by the deputy head and the accountant, or 
such other duly authorized officer of such department 
as the Treasury Board determines. 51 V.; c. 7, s. 9. 

57. Every appropriation account shall be examined 
by the Auditor General on behalf of the House of Com- 
mons. 

2. In the examination of such accounts, the Auditor 
General shall ascertain, first, whether the payments 
which the accounting department has charged to the 
grant are supported by the vouchers required by this Act 
and by proofs of payment; and, secondly, whether the 
money expended has been applied to the purposes for 
Avhich such grant was intended to provide : Provided that 
whenever it appears to the Minister of Finance, that the 
expenditure included, or to be included, in any appropria- 
tion account, or any portion of such expenditure, calls 
for further examination, he may instruct the Auditor 
General to further examine such expenditure and to re- 
port to the Minister of Finance thereon; and if the Min- 
ister of Finance does not, thereupon, see fit to sanction 
such expenditure, it shall be regarded as being not 

309 



THE CANADIAN BUDGETARY SYSTEM 

properly chargeable to a parliamentary grant, and shall 
be reported to the House of Commons, in the manner 
hereinafter provided. 51 V., c. 7, s. 9. 

58. The Auditor General shall, in order that such 
examinations may, as far as possible, proceed pari paSs^i 
with the cash transactions of the several accounting de- 
partments, have free access, at all convenient times, to 
the books of account and other documents relating to the 
accounts of such departments, and may require the sev- 
eral departments concerned to furnish him, from time to 
time, or at regular periods, with accounts of the cash 
transactions of such departments respectively up to such 
times or periods. R.S., c. 29, s. 45. 

59. In conducting the examination of the vouchers 
relating to the appropriation of the grants for the several 
services sanctioned by the Appropriation Act of the year, 
or by any Act of Parliament, the Auditor General shall 
test the accuracy of the additions and computations of 
the several items of such vouchers. 

2. If the -Auditor General is satisfied that the ac- 
counts bear evidence that the vouchers have been com- 
pletely checked, examined and certified as correct in 
every respect, and that they have been allowed, and 
passed by the proper departmental officers, he may admit 
the same as satisfactory evidence of payment in support 
of the charges to which they relate: Provided that, if 
the Minister of Finance desires any such vouchers to be 
examined by the Auditor General in greater detail, the 
Auditor General shall cause such vouchers to be sub- 
jected to such further examination in detail as the 
Minister of Finance thinks fit to prescribe. R.S., c. 29, 
s. 46. 

60. If, during the process of the examination by the 
Auditor General hereinbefore directed, any objection 
arises to any item to be introduced into the appropriation 
account of any grant, such objection shall, notwith- 
standing such account has not been rendered to him, be 
immediately commimicated to the department concerned ; 

310 



APPENDICES 

and, if the objection is not answered to his satisfaction 
by such department, it shall be referred by him to the 
Treasury Board, and the Treasury Board shall deter- 
mine in what manner the items in question shall be 
entered in the annual appropriation account. R.S., c. 
29,8.47. 

61. In reporting as hereinbefore directed for the in- 
form.ation of the House of Commons, the result of the 
examination of the appropriation accounts, the Auditor 
General shall call attention to every case in which, — 

(a) cheques have been issued without his certificate; 
or, 

(b) a grant has been exceeded; or, 

(c) money received by a department from other 
sources than the grants for the year to which the 
account relates has not been applied or accoimted 
for according to the direction of Parliament; or, 

(d) in which a sum charged against a grant is not 
supported by proof of payment; or, 

(e) a payment so charged did not occur within the 
period of the account, or was, for any other reason, 
not properly chargeable against the grant, or was, 
in any way, irregular. 51 V., c. 7, s. 10. 

62. If the Minister of Finance does not, within the 
time prescribed by this Act, present to the House of 
Commons any report made by the Auditor General on 
the appropriation accounts, or on any other accounts, 
the Auditor General shall forthwith present such report. 
R.S., c. 29, s. 49. 

63. Besides the appropriation accounts of the grants 
of Parliament, the Auditor General shall examine and 
audit, if required so to do by the Minister of Finance, 
and in accordance with any regulations which are pre- 
scribed for his guidance in that behalf by the Treasury 
Board,— 

(a) the accounts of all receipts of revenues forming 
the Consolidated Revenue Fund of Canada; 

311 



THE CANADIAN BUDGETARY SYSTEM 

(b) the accounts current with the several banks and 
financial agents of Canada; 

(c) the accounts relating to the issue or redemption 
of loans ; 

(d) the accounts with the several Indian tribes known 
as the Indian Fund ; 

(e) the accounts with the several provinces forming 
the Dominion of Canada ; 

(/) the accounts with the Government of the United 
Kingdom ; and, 

(g) dLYiy other public accounts which, though not re- 
lating directly to the receipts or expenditure of the 
Dominion of Canada, the Treasury Board directs him to 
examine and audit. R.S., c. 29, s. 50. 

64. Such accounts shall be rendered to the Auditor 
General by the departments or officers directed so to do 
by the Minister of Finance. R.S., c. 29, s. 51. 

65. Every public officer into whose hands public 
moneys, either in the nature of revenue or fees of office, 
are paid by persons bound by law or regulation so to do, 
or by subordinate or other officers whose duty it is to pay 
such moneys, wholly, or in part, into the Account of the 
Minister of Finance and Receiver General, or to apply 
the same to any public service, shall, at such times and in 
such form as the Treasury Board determines, render an 
account of his receipts and payments to the Auditor 
General. 

2. The Clerk of the King's Privy Council for Canada 
shall inform the Auditor General of the appointment of 
every such officer. R.S., c. 29, s. 51. 

66. The Auditor General shall examine the several 
accounts transmitted to him with as little delay as pos- 
sible, and when the examination of each account is com- 
pleted he shall make a statement thereof in such form as 
he deems fit, and if it appears from the statement so 
made up of any account, being an account current, that 
the balance thereon agrees with the accountant's balance, 
or if it appears from any account rendered by an ac- 

312 



APPENDICES 

countant, as well as from the statement of such account 
by the Auditor General, that the accountant is 'even and 
quit,' the Auditor General shall sign and pass such state- 
ment of account so made up by laim as aforesaid, 

2. In all other cases the Auditor General after having 
made up the statement of account as hereinbefore 
directed, shall transmit the same to the Minister of 
Finance, who, having considered such statement, shall 
return it, with his certificate attached thereto, to the 
Auditor General, directing him to sign and pass the ac- 
count, either conformably to the statement thereof, or 
with such alterations as he deems just and reasonable; 
and a statement of the account made up by the Auditor 
General in accordance with such certificate from the 
Minister of Finance, shall then be signed and passed by 
the Auditor General. 

3. A list of all accounts which the Auditor General 
has signed and passed, which list shall be so prepared as 
to show thereon the charge, discharge and balance of 
each accountant respectively, shall be submitted by him 
to the Treasury Board twice in every year, that is to say, 
not later than the first week of February, and the first 
week of August. R.S., c. 29, s. 52. 

(yj. As soon as any account has been signed and 
passed by the Auditor General, he shall transmit to the 
accountant a certificate, in which the total amounts of 
the sums forming, respectively, the charge and discharge 
of such account, and the balance, if any, remaining due 
to or by such accountant shall be set forth; and every 
such certificate shall be signed by him and shall be valid 
and effectual to discharge the accountant, as the case 
may be, either wholly or from so much of the amount 
with which he was chargeable, as he appears by such 
certificate to be discharged from: Provided that when 
any account, not being an accoimt current, has been 
signed and passed by the Auditor General with a balance 
due thereon to the Crown, he shall not make out or grant 
any such certificate as aforesaid until the accountant 

313 



THE CANADIAN BUDGETARY SYSTEM 

satisfies him, either that he has discharged the full 
amount of such balance, and any interest which is, as 
hereinafter provided, payable thereon, or that he has 
been relieved from the payment thereof, or of so much 
therof as has not been paid, by an order in council passed 
on a report from the Treasury Board. R.S., c. 29, s. 53. 

68. Whenever the Auditor General is required by the 
Minister of Finance to examine and audit the accounts 
of the receipt, expenditure, sale, transfer or delivery of 
any securities, stamps, Canadian or other Government 
stock or annuities, provisions or stores, the property of 
His Majesty, he shall, after the examination of such ac- 
counts has been completed, transmit a statement thereof, 
or a report thereon to the Minister of Finance, who shall, 
if he thinks fit, signify his approval of such accounts. 

2. The Auditor General, on receipt of such approval 
shall transmit to the accountant a certificate in a form to 
be, from time to time, determined by the Auditor Gen- 
eral, which shall be to such accountant a valid and 
effectual discharge from so m.uch as he thereby appears 
to be discharged from. R.S., c. 29, s. 54. 

69. Whenever an accountant is dissatisfied with any 
disallowance or charge in his accounts made by the 
Auditor General, such accountant may appeal to the 
Treasury Board, which, after such further investiga- 
tions as it considers equitable, whether by znva voce ex- 
amination or otherv/ise, may make such order, directing 
the relief of the appellant, wholly or in part, from the dis- 
allowance or charge in question, as appears to it to be 
just and reasonable; and the Auditor General shall 
govern himself accordingly. R.S., c. 29, s. 76. 

70. Every accountant, on the termination of his 
charge as such accountant, or, in the case of a deceased 
accountant, his representatives, shall, forthwith, pay 
over any balance of public money then due to the Crown 
in respect of such charge, to the public ofificer authorized 
to receive the same. 

2. Whenever it appears to the Auditor General that 

314 



APPENDICES 

balances of public money have been improperly and un- 
necessarily retained by an accountant, he shall report 
the circumstances of such cases to the Minister of 
Finance, who shall take such measures as to him seem 
expedient for the recovery, by legal process or by other 
lawful ways and means, of the amount of such balance 
or balances, together with interest upon the whole or 
upon such part of such balance or balances, for such 
period of time and at such rate as to the Minister of 
Finance appears just and reasonable. R.S., c. 29, s. 59. 

INQUIRIES BY THE AUDITOR GENERAL 

71. The Auditor General ma}^ examine any person on 
oath or affirm.ation on any matter pertinent to any ac- 
count submitted to him for audit; and such oath or 
affirmation may be administered by him to any person 
whom he desires to examine. R.S., c. 29, s. 55. 

J2. The Auditor General may apply to any judge of 
the Exchequer Court of Canada, or to any judge of a 
superior court of any province of Canada, for an order 
that a subpoena be issued from the court, commanding 
any' person therein named to appear before him at the 
time and place mentioned in such subpoena, and then and 
there to testify to all matters within his knowledge 
relative to any account submitted to him, and, if so re- 
quired, to bring with him and produce any document, 
paper or thing which he has in his possession relative to 
any such account as aforesaid; and such subpoena shall 
issue accordingly upon the order of such judge. 

2. Any such witness may be summoned from any part 
of Canada whether within or without the ordinary juris- 
diction of the court issuing the subpoena. 

3. Reasonable travelling expenses shall be tendered to 
any witness so subpoenaed at the time of such service. 
R.S., c. 29, s. 56. 

73. If, by reason of the distance at which any person, 
whose evidence is required by the Auditor General, 
resides from the seat of government, or for any other 

315 



THE CANADIAN BUDGETARY SYSTEM 

cause, the Auditor General deems it advisable, he may 
issue a commission, under his hand and seal, to any of- 
ficer or person therein named, empowering him to take 
such evidence, and report the same to him. 

2. Such officer or person, being first sworn before 
some justice of the peace faithfully to execute the duty 
entrusted to him by such commission, shall, with regard 
to such evidence, have the same powers as the Auditor 
General would have had if such evidence had been taken 
before him, and may, in like manner, apply to and obtain 
from any judge of any of the courts aforesaid, a sub- 
poena for the purpose of compelling the attendance of 
any person, or the production of any document, paper or 
thing before him ; and such subpoena shall issue accord- 
ingly on the order of such judge; or such subpoena may 
issue on the application of the Auditor General to compel 
such attendance, or the production of any document, 
paper or thing before such commissioner. R.S., c. 29, s. 57. 

74. Every person summoned, in the manner herein- 
before provided, to attend before the Auditor General or 
any commissioner appointed as aforesaid, who fails, 
without valid excuse, to attend accordingly, or, being 
commanded to produce any document, paper or thing in 
his possession, fails to produce the same, or refuses to be 
sworn or to answer any lawful and pertinent question put 
to him by the Auditor General or by such commissioner, 
shall, for each such failure or refusal, forfeit the sum of 
one hundred dollars to the Crown, for the public uses of 
Canada, to be recovered in any manner in which debts 
due to the Crown are recoverable ; and such person may 
likewise be dealt with by the court out of which the sub- 
poena issued, as a person who has refused to obey the 
process of such court, and who is guilty of a contempt 
thereof. R.S., c. 29, s. 58. 

LIABILITY CIVILLY 

75. Every officer or person who refuses or neglects 
to transmit any account, statement or return, with the 

316 



y\PPENDICES 

proper vouchers, to the officer or department to whom he 
is lawfully required to transmit the same, on or before 
the day appointed for the transmission thereof, shall, for 
such refusal or neglect, forfeit and pay to the Crown, 
for the uses of Canada, the sum of one hundred dollars, 
recoverable with costs, as a debt due to the Crown, and 
in any court and in any way in which debts to the Crown 
are recoverable. 

2. In any action for the recovery of such sum, it shall 
be sufficient to prove, that such account, statement or re- 
turn ought to have been transmitted by the defendant, 
as alleged on the part of the Crown ; and the burden of 
proof that the same was so transmitted shall rest upon 
the defendant. R.S., c. 29, s. 60. 

76. Whenever the Minister of Finance has reason to 
believe that any officer or person has received money for 
the Crown, or for which he is accountable to the Crown, 
or has in his hands any public money applicable to any 
purpose, and has not paid over or duly applied and ac- 
counted for the same, he may direct a notice to such 
officer or person, or to his representatives in case of his 
death, requiring him or them, within a time from the 
service of such notice, to be therein named, to pay over, 
or apply and account for such money to the Minister of 
Finance or to the offxer mentioned in the notice, and to 
transmit to him the proper vouchers that he or they have 
so done. R.S., c. 29, s. 61. 

yy. If any officer or person fails to pay over, apply or 
account for any such money, and to transmit such 
vouchers as aforesaid within the time limited by the 
notice served on him, the Minister of Finance shall state 
an account as between such officer or person and the 
Crown in the matter to which the notice relates, 
charging interest from the service thereof, and shall de- 
liver a copy thereof to the Attorney General of Canada. 

2. Such copy shall be sufficient evidence to support 
any information or other proceedings for the recovery* 
of the amount therein shown to be in the hands of the 



THE CANADIAN BUDGETARY SYSTEM 

defendant, as a debt due to the Crown, saving to the de- 
fendant the right to plead and give in evidence all such 
matters as are legal and proper for his defence. 

3. The defendant shall be liable for the costs of such 
information or proceeding, whatever the judgment 
therein is, unless,-— 

(a) he proves that, before the time lim.ited in such 
notice, he paid over or applied and duly accounted 
for the money therein mentioned, and transmitted 
the proper vouchers with such account ; or, 

(b) he is sued for such money in a representative 
character, and is not personally liable therefor, or 
to render such account. R.S., c. 29, s. 62. 

78. Whenever any such officer or person as aforesaid 
has transmitted an account, either before or after notice 
as aforesaid, but without vouchers or with insufficient 
vouchers, for any sum for which he therein takes credit, 
the Minister of Finance may direct a notice to such 
officer or person, requiring him to transmit such 
vouchers or sufficient vouchers, as are stated in the 
notice, within such time after the service of the notice 
as the Minister of Finance deems fit; and if such 
vouchers are not transmitted within that time, the Min- 
ister of Finance may state an account against such officer 
or person, disregarding the sums for which he has taken 
credit, but for which he has transmitted no vouchers or 
insufficient vouchers, and may deliver a copy of such 
account to the Attorney General of Canada. 

2. Such copy shall be sufficient evidence to support an 
information or other proceeding for the recovery of the 
amount therein shown to be in the hands of the de- 
fendant, saving to the defendant the right to plead and 
give in evidence all such matters as are legal and proper 
for his defence. 

3. Such defendant shall be liable for the costs of the 
information or proceeding, whatever the judgment 
therein is, unless the vouchers by him transmitted within 
the time limited by the notice served on him, or before 

318 



APPENDICES 

such service, are found of themselves sufficient for his 
defence, and for his discharge from all sums demanded 
of him. R.S., c. 29, s. 63. 

79. If, at any time, it clearly appears by the books or 
accounts kept by or in the office of any officer or person 
employed in the collection or management of the revenue, 
or in accounting for the same, or by his written acknowl- 
edgement or confession, that such officer or person has, 
by virtue of his office or employment, received moneys 
belonging to His Majesty and amounting to a sum cer- 
tain, which he has refused or neglected to pay over, in 
the manner and at the time lawfully appointed, to the 
officer duly appointed to receive the same, a justice or 
judge of any court having jurisdiction in civil matters to 
the amount of the sums so ascertained as aforesaid, shall, 
upon affidavit of the facts made before him by any officer 
cognizant thereof and thereunto authorized by the 
Governor in Council, cause to be issued against and for 
the seizure and sale of the goods, chattels and lands of 
the officer or person so in default as aforesaid, such writ 
or writs as might have issued out of such court, if the 
bond given by him had been put in suit, and judgment 
had been thereupon obtained in favour of His Majesty, 
for a like sum, and any delay by law allowed between 
judgment and execution had expired. 

2. Such writ or writs shall be executed by the sheriflf 
or other proper officer ; and such sum as aforesaid shall 
be levied under them with costs, and all further pro- 
ceedings shall be had, as if such judgment as aforesaid 
had been actually obtained. R.S., c. 29, s. 64. 

80. Whenever any estate belonging to a public ac- 
countant is sold under any writ of extent or any decree 
or order of any court of record, and the purchaser 
thereof, or of any part thereof, has paid his purchase 
money into the hands of any public accountant author- 
ized to receive the same, such purchaser shall be wholly 
exonerated and discharged from all further claims of 
His Majesty, for or in respect of any debt arising upon 

319 



THE CANADIAN BUDGETARY SYSTEM 

the account of such accountant, although the purchase 
money so paid is not sufficient in amount to discharge 
the whole of such debt. R.S., c. 29, s. 65. 

81. If any officer or person has received public money 
for the purpose of applying it to any specific purpose, 
and has not so applied it within the time or in the manner 
provided by law, or if any person having held any public 
office and having ceased to hold the same, has in his 
hands any public money received by him as such officer 
for the purpose of being applied to any specific purpose 
to which he has not so applied it, such officer or person 
shall be deemed to have received such money for the 
Crown for the public uses of Canada, and may be notified 
by the Treasury Board to pay such sum back to the 
Minister of Finance; and the same may be recovered 
from him as a debt due to the Crown, in any manner in 
which debts due to the Crown are recoverable, and an 
equal sum may, in the meantime, be applied to the pur- 
pose to which such sum ought to have been applied. 
R.S., c. 29, s. 66. 

82. If, by reason of any malfeasance, or of any gross 
carelessness or neglect of duty, by any officer or person 
employed in the collection or management of the revenue 
or in collecting or receiving any moneys belonging to the 
Crown, for the public uses of Canada, any sum of money 
is lost to the Crown, such officer or person shall be ac- 
countable for such sum as if he had collected and received 
the same, and it may be recovered from him on proof of 
such malfeasance, gross carelessness or neglect, in like 
manner as if he had so collected and received it. R.S., 
c. 29, s. 67. 

83. Nothing in this Act shall weaken or impair any 
remedy which the Crown has for recovering or enforcing 
the payment or delivering of any money or property be- 
longing to the Crown, for the public uses of Canada, and 
in the possession of an}^ officer or person whomsoever, by 
virtue of any other Act of law. R.S., c. 29, s. 68. 

320 



APPENDICES 



OFFENCES AND PENALTIES 



84. Every officer, or person acting in any office or 
employment, connected with the collection or manage- 
ment of the revenue who, — 

(a) receives any compensation or reward for the per- 
formance of any official duty, except as by law pre- 
scribed ; or, 

(b) conspires or colludes with any other person to de- 
fraud the Crown, or makes opportunity for any 
person to defraud the Crown ; or, 

(c) designedly permits any violation of the law by 
any other person; or, 

(d) w^ilfully makes or signs any false entry in any 
book, or wilfully makes or signs any false certificate 
or return in any case, in v/hich it is his duty to make 
an entry, certificate or return ; or, 

(e) having knowledge or information of the violation 
of any revenue lav/ by any person, or of fraud com- 
mitted by any person against the Crown, under any 
revenue law of Canada, fails to report in writing, 
such knowledge or information to his next superior 
officer; or, 

(f ) demands or accepts or attempts to collect, directly 
or indirectly as payment or gift or otherwise, any 
sum of money, or other thing of value, for the com- 
promise, adjustment or settlement of any charge or 
complaint for any violation or alleged violation of 
law, except as expressly authorized to do by law, or 
by the authority of the department of which he is an 
officer ; 

shall be dismissed from office, and is guilty of an in- 
dictable ouence, and shall, on conviction, be liable to a 
fine not exceeding hvt hundred dollars, and to imprison- 
ment for any term not exceeding one year. R.S., c. 
29, s. 69. 

85. (a) Every person who directly or indirectly, 
promises, offers or gives, or causes or procures to be 

321 



THE CANADIAN BUDGETARY SYSTEM 

promised, offered or given any money, goods, chose 
in action, bribe, present or reward, or any promise, 
contract, undertaking, obligation or security for the 
payment or delivery of any money, goods, chose in 
action, bribe, present or reward, or an> other valu- 
able thing whatsoever, to any officer, or any person 
acting in any office or employment connected with 
the collection or management of the revenue, with 
intent, — 

(i) to influence his decision or action on any 
question or m.atter v/hich is then pending, or may, 
by lav/, be brought before him in his official 
capacity; or, 
(ii) to influence such offixer or person to commit, 
or aid or abet in committing any fraud on the 
revenue, or to connive at, collude in, or allow or 
permit any opportunity for the commission of any 
such fraud ; and, 
(b) Every officer or person who in any wise accepts 
or receives any such moneys, goods, chose in action, 
bribe, present, or reward, or any promise, contract, 
undertaking, obligation or security for the pay- 
ment or delivery thereof, or any other valuable 
thing whatever, or any part of the same respec- 
tively ; 
is guilty of an indictable offence, and liable, on convic- 
tion, to a fine not exceeding three times the amount so 
offered or accepted, and to imprisonment for any term 
not exceeding one year. 

2. Every officer or person who holds any office or 
place under the Crov/n, and is convicted under this sec- 
tion, shall forfeit his office or place; and every person 
who is convicted under this section shall be for ever dis- 
qualified to hold any office of trust, honour or profit 
under the Crov\^n. R.S., c. 29, s. 70. 

86. Every officer and every person acting in any 
office or employment connected with the collection of the 
revenue who is or becomes, directly or indirectly, in- 

322 



APPENDICES 

terested in the manufacture or production of any article 
subject to excise, or who trades in any article subject 
to excise duties, shall incur a penalty not exceeding five 
hundred dollars and not less than fiVty dollars, which 
shall be recoverable in any court of competent jurisdic- 
tion. R.S., c. 29, s. 71. 

^y. Nothing herein contained shall prevent, lessen, or 
impair any remedy which His Majesty or any other per- 
son has against any person offending against this Act, 
or his sureties, or against any other person whomsoever; 
but nevertheless the conviction of any such ofiPender shall 
not be received in evidence in any suit, or action at law 
or in equity, against him. R.S., c, 29, s. 72. 

BOOKS, PAPERS, ETC. 

88. All books, papers, accounts and documents of 
what kind soever, and by w^hom and at whose cost soever 
the paper and materials thereof have been procured or 
furnished, kept or used by, or received or taken into the 
possession of any officer or person em.ployed or having 
been employed in the collection or m.anagement of the 
revenue or in accounting for the sam^e, by virtue of his 
employment as such, shall be deemed to be chattels be- 
longing to His Majesty; and all moneys or valuable 
securities received or taken into the possession of any 
such officer or person by virtue of his employment shall 
be deemed to be moneys and valuable securities belong- 
ing to His Majesty. R.S., c. 29, s. 73. 

OATHS AND DECLARATIONS 

89. Whenever proof on oath or by affirmation or 
declaration is required by any law relating to the col- 
lection or management of the revenue or the accounting 
for the same, or is necessary for the satisfaction or con- 
sideration of the Governor in Council, and no officer or 
person is specially named before whom such proof is to 
be made, such proof may be made before any collector 
or chief officer of the Customs for the port or place where 
the same is required, or before any person acting for any 

323 



THE CANADIAN BUDGETARY SYSTEM 

such collector or chief officer, or before such other officer 
or person as is appointed by the Governor in Council in 
that behalf, who shall administer such oath or affirma- 
tion or receive sue!: declaration, 

2. In any case or class of cases where an oath is re- 
quired by this Act, or by any law in force, in any mat- 
ter relating to the collection or management of the 
revenue or the accounting for the same, the Governor in 
Council may authorize the substitution for such oath, of 
a solemn affirmation or of a declaration, which shall 
then avail to all intents and purposes as such oath would 
have done. R.S., c. 29, s. 74. 

90. Upon all examinations and inquiries made by any 
offixer or person under order of the Governor in Council 
for ascertaining the truth as to any fact, relative to any 
matter concerning the collection or management of the 
revenue or the accounting for the same, or the conduct 
of officers or persons employed therein, and upon like 
examinations and inquiries made by the collector of Cus- 
toms, or by the chief officer employed in the collection 
and management of the revenue, in or at any port, dis- 
trict or place, any person to be examined as a witness 
shall deliver his testimony on oath ; and such oath shall 
be administered to him by the officer or person making 
the examination or inquiry. R.S., c. 29, s. 75. 

HOLIDAYS 

91. No day shall be kept as a public holiday by the 
officers and persons employed in the collection and man- 
agement of the revenue, except Christmas day. New 
Year's day and Good Friday in every year, any day ap- 
pointed by proclamation of the Governor General for the 
purpose of a general fast, or of a general thanksgiving, 
such days as are appointed for the celebration of the 
birthday of His Majesty and His Royal successors, and 
any other statutory holiday, and such other days as are, 
from time to time, appointed as holidays by the Governor 
in Council R.S., c. 29, s. jj. 

324 



APPENDICES 

REMISSION OF DUTIES AND FORFEITURES 

92. The Governor in Council, whenever he deems it 
right and conducive to the pubHc good, may remit any 
duty or toll payable to His Majesty, imposed or author- 
ized to be imposed by any Act of the Parliament of 
Canada, or by any Act or Ordinance of the legislature 
of the late province of Canada, or of any of the provinces 
of Nova Scotia, New Brunswick, British Columbia or 
Prince Edward Island, in force in Canada, and relating 
to any matter w^ithin the scope of the powers of the 
Parliament thereof, or any forfeiture or pecuniary pen- 
alty imposed or authorized to be imposed by any Act or 
Ordinance for any contravention of the laws relating to 
the collection of the revenue, or to the management of 
any public work producing toll or revenue, although any 
part of such forfeiture or penalty is given by law to the 
informer or prosecutor, or to any other person : Provided 
that no duties of Customs or excise, paid to His Majesty 
on any goods, shall be remitted or refunded on account 
of such goods having, after the payment of such duties, 
been lost or destroyed by fire or other unavoidable ac- 
cident. 

2. Such remission may be total or partial, conditional 
or unconditional, and may be granted either before or 
after, or pending any suit or proceeding for the recovery 
of any duty, toll, penalty or forfeiture, and either before 
or after any payment thereof has been made or enforced 
by process or execution; and such remission may be 
exercised by forbearance from instituting any suit or 
proceeding for the recovery of any duty, toll, penalty or 
forfeiture, or, if the same has been already instituted, 
then by the delay, stay or discontinuance of any such 
suit or proceeding, or by the forbearance to enforce, or 
by the stay or abandonment of any execution or process 
upon any judgment, or by the entry of satisfaction upon 
any judgment, or by the refund of any sum of money 
paid to the Minister of Finance for such duty, toll, 

325 



l^HE CANADIAN BUDGETARY SYSTEM 

penalty or forfeiture, or whereof payment has been en- 
forced by any execution or process upon any judgment 
as aforesaid. 

3. If the remission is conditional, the condition, if ac- 
cepted by the person to whom the remission is accorded, 
shall be lawful and valid, and the performance thereof, 
or the remission only, if unconditional, shall have the 
same effect as if the remission had been made after the 
duty, toll, penalty or forfeiture had been sued for and 
recovered ; and if the condition is not performed, it may 
be enforced, or all proceedings may be had as if there 
had been no remission. 

4. No remission shall be made in any case unless such 
case has been considered, and the remission, whether 
total or partial, conditional or unconditional, has been 
recommended by the Treasury Board, and sanctioned 
and ordered by the Governor in Council. 

5. A detailed statement of all remissions and refunds 
of any tolls or duties shall be annually submitted to both 
Houses of Parliament, within the first fifteen days of 
the session thereof next following the close of the last 
preceding financial year. R.S., c. 29, s. 78. 

93. If the Governor in Council directs that the whole 
or any part of any penalty imposed by law relating to 
the revenue be remitted or returned to the offender, such 
remission or return shall have the effect of a pardon for 
the oft'ence for which the penalt}^ is incurred, w^hich shall 
thereafter have no legal effect prejudicial to the person 
to whom such remission is granted. R.S., c. 29, s. 79. 

PROCEDURE 

94. The Attorney General of Canada may sue for and 
recover in His Majesty's name any penalty, or enforce 
any forfeiture imposed by any law relating to the 
revenue, before any court or other judicial authority be- 
fore which such penalty or forfeiture is recoverable or 
enforceable under such law, or may direct the discon- 
tinuance of any suit in respect of any such penalty or 

326 



APPENDICES 

forfeiture by whom or in whose name soever the same 
has been brought. 

2. The whole of the penalty or forfeiture when re- 
covered or enforced, shall belong to His Majesty for the 
public uses of Canada: Provided that the Governor in 
Council may, if he sees fit, allow any portion thereof to 
the seizing officer or other person by whose information 
or aid the penalty or forfeiture has been recovered or 
enforced. R.S., c. 29, s. 80. 

95. Every action and prosecution against any officer 
or person acting in any office or employment connected 
with the collection of the revenue for any thing purport- 
ing to be done in pursuance of any Act relating to the 
collection of the revenue, shall, unless otherwise pro- 
vided, be laid and tried in the district, county or other 
judicial division where the act was committed, and not 
elsewhere, and shall not be commenced except within 
six months next after the act committed. 

2. Notice in writing of such action and of the cause 
thereof shall be given to the defendant one month at 
least before the commencement of the action. 

3. In any such action the defendant may plead the 
general issue, and give the provisions of this section and 
the special matter in evidence at the trial. 

4. No plaintiff shall recover in any such action if 
tender of sufficient amends is made before action 
brought, or if a sufficient sum of money is paid into 
court by or on behalf of the defendant after action 
brought. 

5. If such action is commenced after the time hereby 
limited for bringing it, or is brought or the venue is laid 
in any other place than as aforesaid, a verdict shall be 
found or judgment shall be given for the defendant; and 
thereupon, or if the plaintiff becomes non-suit, or dis- 
continues any such action after issue joined, or if upon 
demurrer or otherwise judgment is given against the 
plaintiff*, the defendant shall recover his full costs as be- 

327 



THE CANADIAN BUDGETARY SYSTEM 

tween solicitor and client, and shall have the like remedy 
therefor as any defendant has by lav/ in other cases. 

6. Although a verdict or judgment is given for the 
plaintiff in any such action, the plaintiff shall not be 
entitled to more than twenty cents damage, and shall not 
have costs against the defendant, if the judge before 
whom the trial is had certifies that the defendant had 
probable cause. 

7. If, on any information or suit on account of any 
seizure made by any such officer or person, judgment is 
given for the claimxant, and the court or judge certifies 
that there was probable cause for the seizure, the claim- 
ant shall not be entitled to costs, and the person who 
made the seizure shall not be liable to any indictment, 
prosecution or suit on account thereof. 

8. Nothing herein shall prevent the effect of any Act 
for the protection of officers from vexatious actions for 
things purporting to be done in the performance of their 
duty. 57-58 v., c. 19, s. I. 



328 



APPENDIX 3 

THE APPROPRIATION ACT, NO, i, 1917 

ACTS 7-8 GEORGE V. 

CHAPTER I 

An Act for granting to His Majesty certain sums of 
money for the public service of the financial years end- 
ing respectively the 31st March, 191 7, and the 31st 
March, 1918. 

[Assented to 7th February, 1917.] 

Most Gracious Sovereign, 

Whereas it appears by messages from His Excellency 
the Most Noble Victor Christian William, Duke of 
Devonshire, etc., etc.. Governor General of Canada, and 
the estimates accompanying the said messages, that the 
sum.s hereinafter mentioned are required to defray cer- 
tain expenses of the public service of Canada, not other- 
wise provided for, for the financial years ending respec- 
tively the thirty-first day of March, one thousand nine 
hundred and seventeen, and the thirty-first day of March, 
one thousand nine hundred and eighteen, and for other 
purposes connected with the public service : May it there- 
fore please Your Majesty that it may be enacted and be 
it enacted by the King^s Most Excellent Majesty, by and 
with the advice and consent of the Senate and House of 
Commons of Canada, that: — 

1. This Act may be cited as The Appropriation Act, 
No. I, ipiy. 

2. From and out of the Consolidated Revenue Fund 
there may be paid and applied a sum not exceeding in 
the whole thirty-two million, one hundred and ninety-five 
thousand, four hundred and forty-one dollars and seven- 
teen cents towards defraying the several charges and ex- 

329 



THE CANADIAN BUDGETARY SYSTEM 

penses of the public service, from the first day of April, 
one thousand nine hundred and seventeen, to the thirty- 
first day of March, one thousand nine hundred and 
eighteen, not otherwise provided for, and being one- 
fourth of each of the several items set forth in Schedule 
A to this Act. 

3. From and out of the Consolidated Revenue Fund 
there may be paid and applied a sum not exceeding in the 
whole nine million, one hundred and twenty-seven thou- 
sand, seven hundred and seventy-seven dollars and forty- 
two cents towards defraying the several charges and ex- 
penses of the public service, from the first day of April, 
one thousand nine hundred and sixteen, to the thirty- 
first day of March, one thousand nine hundred and 
seventeen, not otherwise provided for, and set forth in 
vSchedule B to this Act. 

4. The amounts granted by The Appropriation Act, 
ipij, for the financial year ended the thirty-first day of 
March, one thousand nine hundred and fifteen, and the 
amounts granted by The Appropriation Act, (No. 2), 
ipi6, for the financial year ended the thirty-first day of 
March, one thousand nine hundred and sixteen, and the 
amounts granted by this Act for the financial year end- 
ing the thirty-first day of March, one thousand nine 
hundred and seventeen, for seed grain and relief other 
than seed grain, to settlers in the provinces of Alberta, 
British Columbia, Manitoba and Saskatchewan, shall 
not be deemed to have lapsed if not expended within the 
financial year for which they are granted, but may be 
expended in the financial year ending the thirty-first day 
of March, one thousand nine hundred and eighteen. 

5. A detailed account of the sums expended under the 
authority of this Act shall be laid before the House of 
Commons of Canada during the first fifteen days of the 
then next session of Parliament. 



330 



SCHEDULE A. 



'(Based on the Main Estimates, 19 17-18. One-fourth of 
each amount in this Schedule is voted.) 

Sums granted to His Majesty by this Act for the financial 
year ending 31st March, 1918, and the purposes for 
which they are granted. 



No. 

of 

Vote 


SERVICE 


Amount 


Total 




CHARGES OF MANAGEMENT 

Offices of the Assistant Receivers General and Country 
Savings Banks — 
Salaries 


S cts. 

66,850 00 

6,000 00 

300,000 00 

42,000 00 

80,000 00 

5,600 00 

20,000 00 

15,000 00 


$ cts. 




Contingencies 






Printing Domirion Notes. 




1 


Printing, advertising, inspection, express charges, etc. . . . 
Commission for payment of interest on public debt, pur- 
chase of sinking funds 


















Removal of foreign and uncurrent coin from circulation. . 

CIVIL GOVERNMENT 

Governor General's Secretary' Office — 
Salaries 


535,450 GO 


2 


26,250 00 

66,600 00 

49,412 50 
10,000 00 

154,437 SO 
21,000 00 

187,700 00 
19,500 00 

76.737 SO 
16.000 00 

65,762 50 
10,300 00 

1,191,255 00 
115,000 00 

126,862 50 
21,550 00 

21,712 50 
1 , 700 00 




Contingencies, including allowance of $600 to Private 




3 


Privy Council Office— 






Contipgencies . 




4 


Administration of Justice — 

Salaries, including J. P. Bill, at $4,000. and Miss G. 
Avery, promoted to Second Division, Subdivision B, 
at $1,200 










5 


Department of Militia and Defense — 










6 


Department of the Secretary of State — 

Salaries, including P. T. Kirwan, promoted to First Divi- 
sion, Subdivision B; J. F. Champagne, promoted to 
Second Division, Subdivision A; M. J. Birdwhistle, 
promoted to Second Division, Subdivision B at 
SI. 200 






Contingencies 




7 


Department of Public Printing and Stationery — 

Salaries 










8 


Departm.ent of the Interior — 
Salaries ... . . . . . . 






Contingencies ; 




9 


Department of Indian Affairs — 






Contingencies .... . . 




10 


Royal Northwest Mounted Police — 
Salaries 

















SCHEDULE A— Continued. 



No. 

of 

Vote 


SERVICE 


Amount 


Total 


11 


CIVIL GOVERNMENT— Co«if«t^<j</ 

Office of the Auditor General- 
Salaries, including Assistant Auditor General at $4,500. . 


$ cts. 

143,850 00 
16.500 00 

151,512 50 
30,000 00 

328,100 00 
25,000 00 

180,412 50 
22,000 00 

490,675 00 
100,000 00 

270,950 00 
32,000 00 

188,950 00 
50,000 00 

182,987 50 
28,000 00 

590,250 00 
85,000 00 

381,985 00 
5,500 00 

842,820 00 
125,000 00 

133,700 00 
15,000 00 

54,137 50 
15,000 00 

21,650 00 
58,151 00 

275,000 00 

7,600 00 
150 00 

30,737 50 
26,000 00 

34,512 50 
15,500 00 

37,650 00 

53,425 00 
7,500 00 

33,075 00 
15,500 00 


$ ct». 


12 


Department of Finance and Treasury Board- 
Salaries, including Assistant Deputy Minister at $4,500; 
Comptroller of Dominion Currency at $4,500; Ac- 
countant of Contingencies at $3,000; Commissioner 
of Taxation at $5,000; Assistant Commissioner of 
Taxation at $3,500 






Contingencies . , . . . ... 




13 


Department of Customs — 

Salaries 










14 


Department of Inland Revenue — 
Salaries 










15 


Department of Agriculture — 

Salaries 






Contingencies 




16 


Department of Marine and Fisheries — • 

Salaries, including A. R. Tibbits, transferred from the 
outside service at $2,800 






Contingencies 




17 


Department of Naval Service — 

Salaries ... , .. 










18 


Department of Railways and Canals- 
Salaries, including Assistant to Minister at $4,500; F. M. 
Maclennan at $1,800; R. H. Lang at $1,800 




19 


Department of Public Works- 






Contingencies. ... .^ 




20 


Department of Mines — 
Salaries 










21 


Post Office Department- 






Contingencies 




22 


Department of Trade and Commerce — 

Salaries 










23 


Department of Labour — 

Salaries. . . . .... 






Contingencies 




24 


High Commissioner's Office, London — 






Contingencies . . . . . 




25 


Departments Generally — 

Contingencies — Care and cleaning of Departmental 
Buildings, including amount of $100 to E. Snowdon 
for firing noon gun 




26 


General Consulting Engineer to Dominion Government — 
Salaries. . . . . 






Contingencies 




27 


Department of Insurance — 






Contingencies . . 




28 


Department of External Affairs — 
Salaries. . . ... 






Contingencies 




29 


Office of the Conservation Commission — 
Salaries 




30 


Department of Public Archives — 
Salaries 










31 


Civil Service Commission — 
Salaries 














7 224 561 00 







SCHEDULE A — Continued. 



No. 

of 

Vot( 


SERVICE . 


Amount 


Total 


33 


ADMINISTRATION OF JUSTICE 


$ cts. 

10,000 00 
1,200 00 

7,500 00 
8,000 00 

6,000 00 

1,500 00 

500 00 

333 34 

50 00 

500 00 
5,000 00 

12,000 00 
8,600 00 

5,000 00 
10,000 00 
4,000 00 
8,000 00 


9 cts. 


Living allowance for Judge of Atlin District. B. C 

Supreme Court of Canada 

Contingencies and disbursements, salaries of officers 
(Sheriffs, etc.). books, magazines, etc., for Judges, not 
exceeding $300 






Law books and books of reference for Library and binding 
of same . • . . 






Exchequer Court of Canada 

Contingencies— Judges' travelling expenses, remuneration 
to Sheriffs, etc., printing, stationery, etc., and $150 for 




34 


Printing, binding and distributing Exchequer Court reports 
Miscellaneous expenses, Exchequer Court in Admiralty. . . 
Salary of Marshall in Admiralty Quebec 






To Chas. Morse, for furnishing reports of Exchequer Court 
decisions to legal periodicals 






Yukon Territory 
Travelling allowance of Judge . . 






Living allowance of Judge 






Salaries Territorial Court, Sheriff and clerk, $4,000 each ;two 
stenographers, $2,000 each 




35. 


Living allowance of Court officers and Police Magistrate . . 
Fees and expenses of witnesses, jurors and interpreters in 






Maintenance of prisoners 






Transport of prisoners . . . 






Miscellaneous expenditure . 






DOMINION POLICE 
Amount reouired . ... 


88,183 34 
128.765 00 


^6 


213.000 00 
203 , 100 00 
108.800 00 

99.800 00 
146.300 00 

99.300 00 

102,500 00 

6,000 00 




PENITENTIARIES 
Kingston 






St. Vincent de Paul. 






Dorchester 










V 


British Columbia . . . 






Alberta 






Saskatchewan 












LEGISLATION 
Senate 

Salaries and contingent expenses 


978,800 00 


^8 


112,166 50 

2.000 00 
203.500 00 
58,700 00 
52,050 00 
60,000 00 
73,162 50 

33,650 00 
18,00 00 
1,000 00 

12,800 00 




House of Commons 
Salary of the Deputy Speaker 






Salaries. ... 




39 


Expenses of Committees, Sessional and extra Clerks, etc . . 
Contingencies 






Publishing Debates . , 






Estimates of the Sergeant-at-Arms. . , 




f 


Library of Parliament 
Salaries, including N. Aubry at $900 




40 


Books for the General Library, including binding. 

Books for the Library of American History 






Contingencies 











SCHEDULE A—Continued. 



No. 

of 

Vote 


SERVICE 


Amount 


Total 


f 


LEGISLATION— Conc/Mied 

General 

Printing, printing paper and binding. ... 


$ cts. 

300,000 00 
16,000 00 
10,600 00 

5,000 00 
15,000 00 


$ cts. 


41 


Printing, binding and distributing the annual statutes. . . . 
Contingent expenses in connection with the Voters' Lists . . 
Contingencies of the Clerk of the Crown in Chancery, in- 
cluding the employment of temporary help 

Provincial Voters' Lists . . 






ARTS AND AGRICULTURE 


973,629 00 


42 


30,000 00 

850.000 00 
20,000 00 

85,000 00 

155,000 00 
105,000 00 

50,000 00 
50,000 00 

5.000 00 
517,000 00 

10,000 00 

325.000 00 
30,000 00 

15,000 00 
700.000 00 

150,000 00 
25.000 00 


43 


Experimental Farms — Maintenance of Central Farm, and 
establishment and maintaining of additional branch 




44. 


Branch of Entomology 




45 


For the administration and enforcement of the Destructive 
Insect and Pest Act 




46 


For the development of the dairying industries, and the 
improvement in transportation, sale and trade in food 




47 






48 


Towaids the encouragement of cold storage warehouses for 
the better preservation and handling of perishable food 
products. ... 




49 


Exhibitions 




50 


For renewing and improving Canadian exhibit at Imperial 
Institute, London, and assisting in the maintenance 




51 


Health of Animals 




52 


Dominion Cattle, Quarantine buildings — Repairs, re- 




53 


For the administration and enforcement of the Meat and 
Canned Foods Act . 




54 






55 

56 

57 


International Institute of Agriculture to assist in mainte- 
nance thereof and to provide for representation thereat 

For the development of the Live Stock Industry 

To enforce the Seed Act, to test seeds for farmers and seed 
merchants, to encourage the production and use of 
superior seeds, and to encourage the production of 
farm and garden crops 




58 


For the administration and carrying out of the provisions of 
The Agricultural Instruction Act 






QUARANTINE 

Salaries and contingencies of organized districts and public 
health in other districts 


3,122,000 00 


60 


225,000 00 

11,000 00 
12,000 00 

580.000 00 

600.000 00 

6,000 00 

24.000 00 
5.000 00 


61 


Tracadie and D'Arcy Island Lazaretto, and leprosy 
generally 




62 


Public Works Health Act 




63 


IMiMIGRATION 

Salaries of Agents and employees in Canada, Great Britain 
and foreign countries 




64 


Contingencies in Canadian, British and foreign Agencies 
and general immigration expenses 




65 


Relief of distressed Canadians in countries other than the 
United States 




66 


Administration of Chinese Immigration — 

Salaries. ... . . .... 




67 








PENSIONS 
Mrs. Wm. McDougall . . . . 


1,215,000 00 


68 


1,200 00 
1,600 00 


69 


Pensions on account of the Fenian Raid, 1866-1870 





SCHEDULE A— Continued. 



No. 

of 

Vote 


SERVICE 


Amount 


Total 


70 


PENSIONS— Concluded 

Pensions payable to militiamen, and on active service as 
follows: 

Northwest Rebellion, 1885 § 14,000 00 

General 30, 000 00 


$ cts. 

44,000 00 

1,290 28 

456 25 

54 75 

54 75 

525 00 

450 00 

600 00 

1,000 00 

8,000,000 00 

375,000 00 


$ cti. 


71 


Pensions payable to Mounted Police, Prince Albert 
Volunteers and Police Scouts on account of the Rebel- 
lion of 1885 




72 


Pensions to families of members of the force who lost their 
lives while on duty: — 




73 
74 


Annie Eva Emily and Arthur Stewart Mountford Brooke 
Mrs. Elizabeth Willmett 




75 


Mrs. Elizabeth Fitzgerald. . . 




76 


Pension to J. B. Allan 




77 


Pension to Alis. Marv E. Fuller. . ... 




78 






79 


Pensions — European War 




80 


Salaries and Contingent expenses of the Board of Pension 
Commissioners for Canada . . .... 






MILITIA AND DEFENCE 


8.426,231 03 


81 


80,000 00 

75,000 00 

60.000 00 

25,000 00 

1,000 00 

565,500 00 

50.000 00 

205,500 00 

180,000 00 

2,300,000 00 

70,000 00 

185,000 00 

250,000 00 

150,000 00 

40,000 00 

50.000 00 

200,000 00 


8? 


Cadet Services 




RS 






84 


Customs Dues 




8S 






86 


Engineer Services and Works 




87 






88 


Headquarters and District Siaff . . 




89 


Maintenance Militaiy Properties 




90 


Permanent Force 




91 






97 


Roval Military College 




f>^ 


Salaries and Wages 




94 


Schools of Instruction 




9S 


Survey 




96 


Transport and Freight 




97 




4.487.000 00 


RAILWAYS AND CANALS 

(Chargeable to Capital) 
Canadian Government Railways 
Construction and betterments 


6,500 000 00 

65,000 00 

310.000 00 

3,000.000 00 
500,000 00 

1.600.000 00 
200,000 00 


98 






99 


To provide car ferry — Construction terminals, etc 

Hudson Bay Railway 
Construction of railway, terminals and elevator 




100 


National Transcontinental Railway 
To pay claims for right-of-way, etc. 




101 


Quebec Bridge 
Construction 




10? 


Welland Ship Canal 
Construction, 











SCHEDULE A — Continued. 



No 

of 

Vote 



SERVICE 



Amount 



Total 



103 



104 



105 



106 



107 



108 



109 



!10 



RAILWAYS AND CANALS— Concluded. 
{Chargeable to Capital) — Concluded 
Canals — Capital 
Trent Canal 

Construction 

RAILWAYS AND CANALS 

(Chargeable to Income) 

Canals 

Chambly 

Spare lock gates 

5f. Anne's Lock 

Lockmaster's house 

St. Peters 

Improvements 

Soulanges 

Piers and bieakwater 

Trent 

Improvements 

Welland 
Heavy repai'-e 

AllSCELLANEOUS 

Arbitrations and av/ards 

Board of Railway Commissioners for Canada — Mainte- 
tenance and operation of, including $800 for Clyde 
Leavitt as chief fire inspector 

Board of Railway Commissioners for Canada — To pay 
expenses in connection with cases before the 

Contribution of the Government Railways to the faculty of 
McGill University towards the foundation of a school 
of railway engineering and transpoitation in general, in 
connection with the faculty of Applied Science 

Contribution of the Government Railways to the faculty of 
the Polytechnic School, Montreal, for the advancement 
of learning in connection with railway engineering and 
transportation in general 

Costs of litigation 

Governor General's Cars — Attendance, repairs and altera- 
tions to 

Miscellaneous works not provided for 

Surveys and Inspections — Canals 

Surveys and Inspections — Railways 

To pay expenses in connection with consolidation of Rail- 
way act 

To provide for inquiry and report on the railway situation 
of Canada 

To provide for a continuous audit on behalf of the Govern- 
ment of Canada, of the revenues and expenditures of 
the Canadian Northern Railway and Grand Trunk 
Railway Syst«m» ,,,,,. .....,,..,.,.....,... 



$ Ct8. 



600,000 00 



$ Ct9. 



1 . 700 00 

1.500 00 

45,000 00 

1,000 00 

25,000 00 

30,000 00 

2.000 00 

175,800 00 
15,000 00 

2,500 00 



2,500 00 
3,000 00 

5,000 00 

2,500 00 

25,000 00 

40,000 00 

2.000 00 

120.000 00 



10,000 00 



12.775,000 00 



509,500 00 



SCHEDULE A— Continued. 



No. 

of 

Vote 


SERVICE 


Amount 


Total 




PUBLIC WORKS 


$ cts. 


$ cts. 




{Chargeable to Capital) 








Public Buildings 






Ul 


Ottawa Parliament building— Restoration— The plans for 
the said building and the method to be adopted for 
securing the reconstruction thereof to be subject to the 
approval of the Joint Committee appointed by the 
Prime Minister and the Leader of the Opposition 

Harbours and Rivers 


2.000,000 00 








1.000,000 00 
1,000.000 00 

700.000 00 
1,000,000 00 

750,000 00 
1,000,000 00 






Quebec Harbour — Dry Dock at Lauzon. . 






Quebec Harbour — River St. Charles — Improvements to 
navigation ... . 




11?j 








Port Arthur and Fort William — Harbour and river im- 




i 


Victoria Harbour — Improvements. . . 








7.450,000 00 




PUBLIC WORKS 






{Chargeable to Income) 








Public Buildings 








Nova Scotia 








Halifax — Customs House — Improvements 


3,000 00 
5.000 00 

5.500 00 
2 000 00 




113 


Halifax — Dominion buildings — Improvements, repairs etc. 
Stellarton— Public building (Revote of $4,000 lapsed)— In- 
cluding cost of site with interest at 5 per cent thereon. 
Sydney public building — Improvements. , . 






Netv Brunswick 






114 


St. John— Dominion buildings— Improvements, repairs, 
etc. . . . 


5.000 00 
5 000 00 




I 








Maritime Provinces Generally 






lis 


Dominion public buildings— Improvements, repairs, etc. . 
Quebec 


25.000 00 






Dominion public buildings — Improvements, repairs, etc. 
Grosse He Quarantine Station — Irnprovements and repairs 


35,000 00 

15,000 00 
20,000 00 
20,000 00 
30,000 00 
80.000 00 
2,000 00 
05,000 00 




116 


Montreal General Post Office— Remodelling old building. . 
Montreal — Postal Station "A" 






Montreal Dominion buildings — Improvements, repairs etc 
Quebec Post Office — Enlargement and alterations 












Ontario 








Cardinal— Public building 


4.000 00 

3.500 00 

3.000 00 

35,000 00 

3 , 100 00 

8.000 00 

75.000 00 

25,000 00 

10.000 00 

2,500 00 

1 






Cayuga — Public building— Heating and plumbing im- 






Cornwall public building — Improvements 




in 


Dominion public buildings — Improvements, repairs, etc. . 
Hamilton Post Office — Electric wiring and fixtures, etc . . . 
Kingston. R.M.C. — Covered drill hall 






Ottawa departmental buildings — Fittings, etc 












Ottawa Departmental buildings — Rewiring, etc 






Ottawa Departmental buildings — Renewing metal cover- 
ing on Mackenzie wing of West Block 











SCHED ULE A—Continued. 



No. 

of 

Vote 


SERVICE 


Amount 


Total 




PUBLIC WORKS— Continued 


% Ct3. 


$ ctt. 




(Chargeable to Income) — Continued 


" 






Public Buildings — Concluded 








Ontario — Concluded. 






! 


Ottawa Departmental buildings — Building and macerating 
plant for Currency Branch of Finance Department. . 


22,000 00 

12,000 00 
5,000 00 

10,000 00 

3,000 00 

7,000 00 

500,000 00 

12,000 00 






Ottawa Royal Mint — Repairs and improvements 

Palmerston — Public building 




,t7j 


St. Catharines public building — P.epairs to roof, etc 

Sydenham — Public building 




1 


Toronto — Postal Station "A" 




1 


Toronto Dominion buildings — Improvements, repairs, etc. 






Manitoba 






US 


Dominion public buildings — Improvements, repairs, etc. . 
Winnipeg Dominion buildings — Improvements, repairs, etc 
Winnipeg immigration buildings — Improvements 


18,000 00 

20.000 00 

3.000 00 

40.000 00 






Saskatchewan 






119 


Dominion public buildings—Improvements, repairs, etc. . 
Sutherland — Water supply for Forest Nursery Station 

Alberta 


15,000 00 
8,000 00 






Calgary— Drill hall 


250,000 00 

3,000 00 

15,000 00 




120 


Calgary — Dominion buildings — Improvements, repairs, etc. 
Dominion public buildings — Improvements, repairs, etc. . 






British Columbia 








Ashcroft— Public Building. . . ... 


10,000 00 

17,000 00 

1.000 00 

7,000 00 

10,000 00 




121 


Dominion public buildings — Improvements, repairs, etc. . 

New Westminster — Public building — Paving roadway 

Vancouver — Dominion buildings — Improvements, repairs, 
etc 






William's Head Quarantine Station — Repairs to existing 
buildings, fittings, etc 






Generally 






Experimental Farms — New buildings and improvements, 
renewals and repairs, etc., in connection with existing 
buildings, fences, etc. . . . 


150,000 00 

5,000 00 

10,000 00 

30,000 00 




i22 








Dominion public buiMinps — Fire escapes. . 






Dominion public buildings — Generally 






Rents, Repairs, Furniture, Heating, etc. 








Ottawa public buildings: — 

Astronomical Observatory— Maintenance, care of 


5,000 00 
45,000 00 
60,000 00 

180,000 00 

450.000 00 

65.000 00 
17.000 00 
47,000 00 

25,000 00 
4,000 00 

i„ : ™_ -■ -^ 






Elevator attendants. ... ... 






Gas and electric light, including roads and bridges 

Heating, including salaries of engineers, firemen and 




1?^ 


Repairs, furniture, grounds, snow and street raainte- 






Rideau Hall (including grounds) improvem.ents, -furni- 






Rideau Hall — Allowance for fuel and light 












Dominion Public Buildings: — 

Dominion Immigration Buildings — Repairs, furniture, 
etc. ... . . . . 

















SCHEDULE A— Continued. 



No 

of 

Vot 


SERVICE 


Amount 


Total 




PUBLIC WORKS— Contimied 

(Chargeable to Income) — Continued 

Public Buildings— Com/iwmcJ 

Rents, Repairs, Furniture, Heating, e/c— Concluded. 

Kitting^ 3.nd general supplies and furniture . 


$ cts. 

160.000 00 
240.000 00 
200.000 00 

38.000 00 

700,000 00 

550,000 00 

30,000 00 

50,000 00 

63.000 00 

700 00 

500 00 

2,000 00 

950 00 

2,500 00 

3,000 00 

1,000 00 

4,000 00 

4.000 00 

1.300 00 

2.500 00 

1.650 00 

140,000 00 

500 00 

60,000 00 

1,500 00 

800 00 

900 00 

3,000 00 

600 00 

900 00 

1,500 00 
2,000 00 
600 00 
2.300 00 
2.000 00 
2.000 00 
1.800 00 
1 . 500 00 
2.200 00 
3.000 00 
1.300 00 

23.000 00 
1.600 00 

3.000 00 

700 00 

4,500 00 

750 00 
-SO 00 

14,000 00 

900 00 
1,600 00 


% cts. 










Lighting ... 






Power for running elevators, stamp cancelling machines, 
etc. ... . . 




173 


Rents 






Salaries of caretakers, engineers, firemen, etc 






Supplies for caretakers etc. . . 






Water . 






Yukon Public Buildings — Rents, repairs, fuel, light, 
water service and caretakers' salaries 






Harbours and Rivers 
Nova Scotia 
A.mherst Point — Repairs to wharf. . . 






Anderson's Cove — Repairs to breakwater. . . 






Annapolis Royal — Repairs to pier 

Burlington — Repairs to wharf 


















Chipman Brook — ^To repair breakwater. . . 






Church Point — Repairs to wharf and breakwater 

Culloden — To repair breakwater and remove rock 






Digby Pier — Renewals . 
























Harbours and rivers generally — Repairs and improvements 






Little Harbour — Reconstruction of whatf 












Margaretville — Repairs to breakwater. . . . 




124 


McKay's Point (Judique) — Repairs to breakwater 

McNair's Cove — Repairs to breakwater 






Meteghan River — Repairs and improvements to break- 
water 












North River (St. Anne's) — Repairs to wharf. . . ... 






North Sydney — Repairs to ballast wharf. . . 


















Port Hilford — Repairs to breakwater 






Round Hill — Repairs to wharf. . . . 












Saulnierville — Breakwater improvements and repairs 

Scott's Bay — Repairs to breakwater. . . 






Shubenacadie River — To pay the Dominion Atlantic Rail- 
way Co. for the enlargement of draw span on railway 
bridge and construction of warping piers 






Trout Cove — Removal of rock and gravel and repairs to 
new breakwater. 






West Ai-ichat — Repairs to wharf 






Yarmouth Harbour — Repairs and improvements 

Prince Edward Island 
Annandale — Repairs to wharf 






China Point — Repairs to wharf 




PS 


Harbours and Rivera generally— Repairs and improve- 






Hurd'8 Point, Bedeque — Repairs and improvements to 
wharf 






Little Sands — Wharf Improvements 











SCHEDULE A— Continued. 



No 

of 

Vote 



SERVICE 



Amount 



125 



126 



127 



128' 



PUBLIC WORKS—Continued 

(Chargeable to Income) — Continued 

Harbours and Rivers — Continued 

Prince Edxvard Island — Concluded. 

Miminigash — Repairs to breakwaters and beach protection 

works , 

Port Selkirk — Repairs to pier 

Souris — Repairs to breakwater 

Tignish — Repairs to breakwaters 

Victoria — Repairs to pier 

Wood Island — Repairs to breakwaters 



New Brunswick 



Anderson's Hollow — Repairs to wharf 

Back Bay — Wharf repairs and improvements 

Bathurst — Harbour improvements 

Cape Bald — Repairs to breakwater-pier 

Dorchester — Wharf improvements 

Great Salmon River — Repairs and improvements to break 

water 

Harbours and Rivers generally — Repairs and improve 

ments 

Mills Point — Repairs to wharf 

Neguac — Repairs to wharf. 

Richibucto Beach — Breakwater repairs and improvements 
Shippigan Gully — Repairs to breakwater and breastworks 

St. Nicholas River — Repairs to wharf 

Tynemouth Creek — To reconstruct and repair breakwater 
Welchpool — Repairs to wharf 



Maritime Provinces Generally 

To purchase creosoted timber for v/orks in the Maritime 
Provinces generally 



Quebec 



Anse aux Gascons — Repairs to wharf 

Bale St. Paul — Repairs to wharf 

Berthier (en bas) — Repairs to wharf 

Cape Cove — Repairs to pier 

Chambord — Wharf repairs and reconstruction 

Clark City — Reconstruction of wharf 

Desjardins — Repairs to wharf 

Father Point — Wharf improvements 

Gaspe Deep Water Wharf — Repairs 

Harbours and Rivers generally — Repairs and impi 

ments 

Hudson — Reconstruction of wharf 

Isle Perrot North — Repairs to wharf 

Isle Verte — Repairs to wharf 

Lacolle — Repairs to wharf 

Laprairie — Protection works 

Lotbiniere — Repairs to wharf 

Murray Bay — Repairs and improvements to wharf. . 

Ouareau River — Repairs to icebreaker 

Phillipsburg — Wharf reconstruction 

Point Pizeau — Repairs to wharf 

Point St. Pierre — Repairs to breakwater 

Rimouski — Harbour improvements 

Rimouski wharf — Water supply . 

Riviere des Vases — Repairs to pier 

Riviere Quelle — Repairs and improvements to wharf. 

St. Alexis — Repairs to wharf 

St. Alphonse — Repairs to wharf 

St. Andre de Kamouraska — Repairs to wharf 

Ste. Anne des Momts — Landing pier 

Ste. Felicite — Repairs to wharf 

St. Ignace de Loyola — Repairs to dyke 

St. Irenee — Repairs to wharf 



1 , 000 00 
800 00 
1,000 00 
2,500 00 
1 , 100 00 
2,500 00 



1,400 00 
3,500 00 
85,000 00 
1,500 00 
1,500 00 

1,100 00 

40,000 00 

600 00 

4,000 00 

1,600 00 

3,500 00 

900 00 

5,500 00 

850 00 



5,000 00 



500 00 
2,500 00 
1,000 00 
1,200 00 
5,000 00 
4,500 00 
2,500 00 
1 , 100 00 
17,000 00 

75,000 00 
4,800 00 
1,600 00 
2,500 00 
2,900 00 

85,000 00 
1,800 00 
3.500 00 
1,500 00 
2,000 00 

11,100 00 

1,900 00 

170,000 00 

6,000 00 

1,000 00 

5,400 00 

3,800 00 

2,600 00 

1,500 00 

6,650 00 

600 00 

600 00 

660 00 



SCHEDULE K— Continued. 



No. 

of 

Vote 



SERVICE 



Amount 



ToUl 



PUBLIC WORKS— Cow/»H«fd 

{Chargeable to Income) — Continued 

Harbours and Rivers — Concluded 

Quebec — Concluded 

St. Jean Deschaillons — Repairs to wharf approach , 

St. Johns — To rebuild ice pier and replace piles 

St. Laurent, Island of Orleans — Repairs to wharf 

St. Michel de Bellechasse — Repairs to wharf , 

St. Paul, He aux Noix — Repairs to whaif 

Tiois Pistoles — Repairs to wharfs and breakwater , 

Varcnnes — Protection work , 

Ontario 

Belle River — Repairs to sheet piling 

Big Bay Point — Repairs to wharf 

Bowmanville — Repairs to pier 

Bronte — Repairs to pier 

Bruce Mines — Repairs to and reconstruction of wharf. . . , 

Coburg — Repairs to east pier 

Colchester — Repairs to wharf 

French River dams — Repairs and maintenance 

Goderich — Repairs to harbour works 

Haileybury — Repairs to whaifs 

Harbours and Rivers generally — Repairs and improve- 
ments 

Kingston — Harbour improvements 

Leamington — Repairs to wharf 

Michipicoten River — Repairs to wharf 

Newcastle — Repairs to east pier 

New Liskeard — Repairs to wharf 

Pelee Island — Repairs to dock 

Pembroke — Repairs to wharf 

Petawawa — Repairs and improvements to wharf 

Port Bruce — Repairs to piers 

Port Burwell — Repairs to piers 

Port Stanley — Harbour improvements 

Rainy River — Repairs to protection work 

Rondeau Harbour — Repairs and renewals to piers 

Saugeen River at Southampton — Repairs to piers 

Shrewsbury — Repairs to pier 

Silver Centre — Repairs to wharf 

Manitoba 

Arnes — Repairs to wharf 

Gimli — Repairs to wharf 

Harbours and Rivers generally — Repairs and impiove- 

ments 

Hnausa — Repairs to wharf 

Lake Francis Outlet — Repairs to guard piers 

Saskatchewan and Alberta 

Harbours and Rivers generally — Repairs and improve- 
ments 

British Columbia 

Fraser River (lower) — Improvements 

Harbours and Rivers generally — Repairs and Improve- 
ments 

Holberg — Repairs to wharf 

James Island — Repairs to v/harf 

Metchosin — Repairs to v/harf 

Prince Rupert Quarantine Station — Repairs to wharf. . . . 

Quatsino — Repairs to wharf 

Sidney Island — Repairs to wharf 

Stickine River — Improvements 

To purchase a supply of creosoted timber for use in re- 
pairing wharfs 





760 00 


1 


,200 00 


3 


,800 00 


1 


.600 00 




750 00 


1 


,000 00 


1 


.200 00 




900 00 




850 00 


10 


000 00 


1 


,000 00 


1 


000 00 


15 


,000 00 


1 


000 00 


1 


000 00 


3 


000 00 


2 


000 00 


65 


000 00 


52 


000 00 


2 


100 00 


1 


,100 00 


17 


500 00 




700 00 


1 


000 00 


9 


400 00 




800 00 


2 


100 00 


36 


000 00 


96 


000 00 




800 00 


3 


500 00 


3 


600 00 




900 00 


1 


000 00 


1 


500 00 




500 00 


15 


000 00 


1 


200 00 




800 00 



20,000 00 



20,000 00 

75,000 00 
3,300 00 
750 00 
1,700 00 
1,500 00 
4,300 00 
2,200 00 
5,400 00 

10.000 00 



SCHEDULE A— Continued, 



No. 

of 

Vote 


SERVICE 


Amount 


Total 




PUBLIC WORKS— Concluded 


$ cts. 


$ cts. 




(Ckargeable to Income) — Concluded 








Harbours and Rivers — Continued 








British Columbia — Concluded. 








Ucluelet — Repairs to wharf 


600 00 
6,500 00 
2 , 100 00 

3,500 00 






Union Bay — Repairs to wharf , ... 




132 








Williams Head Quarantine Station — Improvements and 
repairs 






Generally 






133 




40,000 00 






Dredging 








65,000 00 
500,000 00 
500,000 00 

90,000 00 
550,000 00 






Dredging — Maritime Provinces . . 




134 








Dredging — Manitoba, Saskatchewan and Alberta 






Slides and Booms 




135 




5,000 00 






Roads and Bridges 










5,000 00 
3,500 00 

7,000 00 




136 


Edmonton — Repairs to bridge 






Ottawa — Maintenance and repair of bridges, and ap- 
proaches 






Telegraph and Telephone Lines 








Nova Scotia 






137 


Cape Breton Telegraph System — Repoling and general 


4,600 00 






Prince Edward Island 






138 


For half cost of reconstruction of telegraph lines jointly 
owned by the Anglo-American Telegraph Co., and the 


17,000 00 






Quebec 




139 




3,000 00 






Saskatchewan and Alberta 








Moosejaw — Wood Mountain telegraph line — Renewal of 
poles 


5,000 00 
3,200 00 
3,325 00 
2,350 00 




140 


Peace River Line — Office and dwelling at Grande Prairie . . 

Peace River Line — Office and dwelling at Dunvegan 

Repairs and improvements to office buildings. . . 






British Columbia 






141 


Mainland telegraph and telephone lines — General repairs 


22,400 00 






Miscellaneous 








Architectural Branch— Salaries of architects, clerks of 
works. Inspectors, draughtsmen, clerks and mea- 


60,000 00 
435,000 00 




142 


Engineering Branch— Salariee of engineers, Inspectors, 
superintendents, draughtsmen, clerks and messengers 
of outside service 









SCHEDULE A— Continued, 



No. 

of 

Vote 



SERVICE 



Amount 



Total 



PUBLIC WORKS— Continued 

(Chargeable to Income) — Continued 

Miscellaneous — Concluded. 

Monument of His late Majesty King Edward VII 

Construction and operation of water storage dams on the 
Ottawa River and tributaries, surveys in connection 
therewith, and settlement of land damages 

Dry docks generally — Inspection, etc 

River gaugings and metering 

The National Gallery of Canada 

Surveys and inspections 

To cover balance of expenditure for works already author- 
ized for which the appropriations may be insufficient, 
provided the amount for any one work does not exceed 
$200 

Monument to memorj' of the late Hon. Thos. D'Arcy 
McGee 

Accounts Branch — Salaries of agents and clerks, travelling 
and contingent expenses of outside service 

Georgian Bay Ship Canal Royal Commission 

To pay Western Dry Dock and Ship-building Co., Limited, 
of Port Arthur, a portion of the fourth payment of 
subsidy due them upon their completion of the work 
covered by the agreement ratified by Chap. 57, 3-4 
George V, 1913, notwithstanding that the work is not 
completed 

For operation and maintenance of inspection boats 

MAIL SUBSIDIES AND STEAMSHIP SUBVENTIONS 
Atlantic Ocean 

Steam service between Annapolis and London or Hull 

England, or both 

Steam service between Canadian Atlantic ports and Aus 

tralia and New Zealand , 

Ocean and mail service between Canada and Great Britain 

Steam service between Canada and Cuba 

Steam service or services between Canada and Newfound 

land 

Steam service between Canada and the West Indies or 

South America or both 

Steam service between Canada and South Africa 

Steam service between Halifax, St. John's, Newfoundland 

and Liverpool 

Steam service between Montreal, Quebec and Manchester 

England, during the summer season, and between St. 

John, Halifax and Manchester during the winter 

season 

Winter steam service between St. John, Dublin and Belfast 
Winter steam service between St. John and Glasgow. 
Winter steam service between St. John, Halifax and 

London 

Steam service between St. John, Halifax and London .... 

Pacific Ocean 

Steam service between Canada and Australia or New 

Zealand or both, on Pacific Ocean 

Steam service between Canada, China and Japan 

Steam service between Prince Rupert, B. C, and Queen 

Charlotte Islands 

Steam service between Victoria and San Francisco . . . 
Steam service between Victoria, Vancouver way ports 

Skagway 

Steam service between Victoria and West Coast Vancouver 

Island 

Steam service between Vancouver and northern ports of 

British Columbia 



cts. 



10,000 00 



115,000 00 

10,000 00 

20,000 00 

8,000 00 

130,000 00 



10,000 00 
8,000 00 



20,000 00 
25.000 00 



35,641 SO 
50,000 00 



5,000 00 

140,000 00 

1,000 000 00 

25,000 00 

70,000 00 

340,666 66 
146,000 00 

20.000 00 



35,000 00 

7,500 00 

15.000 00 

15,000 00 
25,000 00 



180,509 00 
253,333 34 

16,000 00 
3,000 00 

12,500 00 

5,000 00 

16,800 00 



SCHEDULE A — Continued. 



No. 

of 
Vote 



SERVICE 



Amount 



MAIL SUBSIDIES AND STEAMSHIP SUBVENTIONS 

— Conchided 

Local Services 



167 
168 



169 
170 



171 
172 
173 

174 

175 

176 

177 

178 
179 

180 

181 
182 

183 

184 
185 

186 

187 
188 
189 
190 

191 
192 

193 

194 

195 

196 

197 

198 

199 

200 
201 



Steam service between Baddock and lona 

Steam service between Charlottetown, Victoria and Holi- 
day's Wharf 

Steam service between Froude's Point and Lockport. N. S, 
Steam service from the opening to the closing of navigation 

in 1917, between Gaspe Basin and Dalhousie or 

Campbellton 

Steam service between Grand Manan and the mainland 
Steam service between Halifax, Canso and Guysboro . . 
Steam service between Halifax and Newfoundland via Cape 

Breton ports 

Steam service between Halifax, Mahone Bay, Tancook 

Island and La Have River ports 

Steam service between Halifax and Spry Bay and ports in 

Cape Breton 

Steam service between Halifax, South Cape Breton and 

Bras d'Or Lake ports 

Steam service between Halifax and West Coast Cape 

Breton calling at way ports 

Steam service between Halifax and Sherbrooke 

Steam service from the opening to the closing of navi 

gation between Kenora and Fort Frances 

Steam service from the opening to the closing of navigation 

in 1917 between the mainland and the Magdalen 

Islands 

Steam service between Mulgrave and Canso 

Steam service between Mulgrave and Guysboro, calling at 

intermediate ports 

Steam service between Newcastle. Neguac and Escuminac, 

calling at all intermediate points on the Miramichi 

River and Miramichi Bay 

Steam service between Pelee Island and the mainland .... 
Steam service between Petit de Grat and Intercolonial 

Railway terminus at Mulgrave 

Steam service on the Petitcodiac P.iver between Moncton 

and way ports, and a port or ports on the west coast of 

Cumberland County 

Steam service between Pictou and Montague, calling at 

Murray Harbour and Georgetown 

Schooner service between Pictou, New Glasgow, Antigonish 

County ports and Mulgrave 

Steam service from the opening to the closing of navigation 

in 1917, between Pictou, Mulgrave and Cheticamp 
Steam service from the opening to the closing of navigation 

in 1917, between Port Mulgrave, St. Peter's, Irish 

Cove and Marble Mountain and other ports on the 

Bras d'Or Lakes 

Steam service between Prince Edward Island and Cape 

Breton and Newfoundland 

Steam service during the year 1917, between Quebec and 

Harrington, calling at the ports and places along the 

northern shore of the River St. Lawrence between such 

terminals , 

Steam service between Quebec and Gaspe Basin, touching 

at intermediate points 

Steam service between Quebec and ports on the north shore 

of the Isle of Orleans 

Steam service between Riviere du Loup, Tadoussac and 

other North Shore ports 

Winter steam service between Riviere du Loup, Tadoussac 

and other St. Lawrence ports 

Winter steam service between St. Catharines Bay and' 

Tadoussac 

Steam service between St. John and ports in Cumberland 

Basin 

Steam service between St. John, N. B., and St. Andrew, 

N. B., calling at intermediate points 

Steam service between St. John and Bridgetown 

Steam service between St. John and Digby 



5.825 00 


2.500 00 
600 00 


15,000 00 

10,000 00 

5.000 00 


10,000 00 


4,000 00 


4,000 00 


6,000 00 


4,000 00 
2,000 00 


8.000 00 


18,000 00 
6,500 00 


5,500 00 


2,500 00 
8,000 00 


7,000 00 


2,500 00 


6.000 00 


1,000 00 


7.500 00 


6,500 00 


20.000 00 


28,000 00 


8,500 00 


4,500 00 


6,000 00 


8,000 00 


3,500 00 


3,000 00 


4,000 00 

2,500 00 

20,000 00 



SCHEDULE A— Continued. 



SERVICE 



Amount 



Total 



MAIL SUBSIDIES AND STEAMSHIP SUBVENTIONS 
— Concluded. 

Local Services — Concluded 

Steam service between St. John, Digby, Annapolis and 
Granville, viz. along the west coast of the Annapolis 
Basin 

Steam service between St. John, N. B., and ports on the 
Bay of Fundy and Minas Basin, and Margaretville. 
N. S 

Steam service or services between St. John, Westport and 
Yarmouth and other way ports 

Steam service during the year 1917, between St. Stephen, 
N. B., Ste. Croix River Points, Deer Island, Campo- 
bello and the inner islands, Passamaquoddy Bay and 
L'Etete or Back Bay 

Steam service during the season of 1917, between Sydney 
and Bay St. Lawrence, calling at way ports 

Steam service during the season 1917, between Sydney and 
Whycocomagh 

Steam service from Sydney, N. S.,around the East Coast of 
Cape Breton to Hastings and return to Sydney via the 
Bras d'Or Lakes 

Expenses in connection with the supervision of subsidized 
steamship services 



DEPARTMENT OF THE NAVAL SERVICE 

Naval Service — To provide for the maintenance and up 
keep of ships. Naval College, Dockyards at Halifax 
and Esquimalt and Royal Naval Canadian Volunteer 
Reserve 

Fisheries Protection Service — To provide for the repairs 
and maintenance of fisheries protection steamers .... 

Fisheries Protection Service — To provide for new vessels . . 

Hydrographic Surveys 

Radiotelegraph Service — To provide for the building and 
maintenance of wireless stations 

Tidal Service — To provide for the maintenance of tidal 
stations and surveying steamers , 

Patrol of the northern waters of Canada . . , 

Life-saving stations, including rewards for saving life. . . , 

OCEAN AND RIVER SERVICE 

Maintenance and repairs to Dominion steamers and ice 

breakers 

Examiners of Masters and Mates 

Investigations into wrecks 

Expenses of Schools of Navigation 

Registration of Shipping 

Removal of obstructions in navigable waters 

Inspection of live stock shipments 

To continue subsidy for wrecking plants — 

Quebec, Maritime Provinces and British Columbia. . . . 

Unforeseen expenses 

To provide for the construction of two steamers to replace 
the "Quadre" 



PUBLIC WORKS 

(Chargeable to Capital) 
Marine Department 



River St. Lawrence Ship Channel 

To provide for construction and completion of dredging 
plant for St. Lawrence River from Montreal to Father 
Point 



2,000 00 



8 


000 00 





.000 00 


6 


000 00 


6,000 00 


3 


.000 00 


5 


.500 00 


3 


,000 00 



1,000,000 00 

375,000 00 
100,000 00 
290,000 00 

295.000 00 

35,000 00 

50,000 00 

125,400 00 



180,000 00 

16,500 00 

12,300 00 

8,000 00 

3,000 00 

20,000 00 

5,000 00 

45,000 00 
5.000 00 

150,000 00 



672,000 00 
216,550 00 



1,444,800 00 



8S8,550 00 



SCHEDULE A—Continued. 



No. 

of 

Vote 



SERVICE 



Amount 



Total 



230 
231 
232 
233 



234 
235 



236 
237 



238 
239 



240 

241 
242 
243 



244 



245 



246^ 



247 



248 



249 
250 
251 
252 



LIGHTHOUSE AND COAST SERVICE 



Agencies, rents and contingencies 

Salaries and allowances to lightkeepers 

Maintenance and repairs to lighthouses 

Construction of lighthouses and aids to navigation, in- 
cluding apparatus, submarine signals, and providing 
suitable boats for carrying on construction work . . 

Signal service 

Administration of pilotage and maintenance and repairs to 
steamer Eureka 

Maintenance and repairs to wharves 

To provide for breaking ice in Thunder Bay and Lake Su 
perior and other points deemed advisable for the good 
of navigation ^ 

Repairs to Maritime Road 

Amount required to pay pension of $300 each per annum to 
following retired pilots: — Ls. R. Demers, Theodule La- 
chance, Jos. Lapointe, Nestor Lachance, Paul Gobeil 
Barthelemi Lachance, Alphonse Asselin, Chas. Nor- 
mand, Nap. Rioux, Elzear Desrosiers, Hubert Ray- 
mond, Arbel Bernier, Laurent Godbout, Adelme 
Pouliot, Edmond Larochelle, L, E. Morin, A. T 
Simard, J. Plante, V. Vezina, J. G. Dupil, Raymond 
Paquet, Alfred Larochelle, Elzear Godbout, Theophile 
Corriveau, Alphonse Pouliot, Emilio Couillard, TrefHe 
Delisle, David Dumas, Alfred Goudreau 

To provide for telephones at different points throughout the 
Dominion in connection with aids to navigation .... 

New vessel to replace the Maisonneuve 

Amount required for rebuilding of Scout 

Allowance to Harbour Master at Amherstburg, for super- 
vision of lights and buoys in St. Clair River, Detroit 
river, Lake Erie and other services during the season 
of navigation 



SCIENTIFIC INSTITUTIONS 

Department of the Interior 

Astronomical Surveys — Investigations and demarcations, 
etc., including expenses of Dominion Astronomical 
Observatory at Ottawa and Branch at Saanich Hill, 
B. C, and $1,000 to J. J. McArthur, as International 
Boundary Commissioner 



Department of Marine and Fisheries 

Meteorological Service, including Magnetic Observatory, 
grants of $500 each to Kingston and Montreal Ob 
servatories; also allowance of $400 to L. F. Gorman, 
Observer at Ottawa 



MARINE HOSPITALS 

Marine Hospitals, including grants to institutions assisting 

sailors 

Shipwrecked and distressed seamen 



STEAMBOAT INSPECTION 

Steamboat Inspection 

FISHERIES 

Salaries and disbursements of Fishery Officers, including 
the expenses of the Fisheries Advisory Board, and an 
allowance of $300 to W. J. E. Casey. Secretary thereof 

Building fishways and clearing rivers 

Legal and incidental expenses 

Canadian Fisheries Museum 

Oyster culture 



$ cts. 

166,000 00 
485,000 00 
750.000 00 



600,000 00 
60,000 00 



56,300 00 
10.000 00 



40,000 00 
1,000 00 



8.700 00 

500 00 
12,000 00 
12,000 00 



400 00 



197,500 00 



201,793 00 



75.000 00 
3,000 00 



305,000 00 

30,000 00 

4.000 00 

8,000 00 

6,000 00 



2.201.900 00 



399,293 00 



78,000 00 



79,749 00 



SCHEDULE A— Continued. 



SERVICE 



Amount 



Total 



FISHERIES— Concluded 

To assist in the establishment, maintenance and inspection 
of cold storage for bait, the conservation and develop- 
ment of deep sea fisheries, and to provide for better 
transportation facilities for fresh fish 

To provide for the reduction of dogfish by means of ex- 
perimental works or otherwise 

To pay Customs Officers for services in connection with 
issuing modus vivendi licenses 

To provide for the maintenance of a Fisheries Intelligence 
Bureau 

Fisheries Patrol Service 

To provide for a Fisheries exhibit at the Canadian Na- 
tional Exhibition at Toronto 

Salaries, building and maintenance of fish breeding estab- 
lishments 

To provide for the inspection of pickled fish 

Marine Biological Board of Canada 



MINES AND GEOLOGICAL SURVEY 
Mines Branch 

Investigation of ore and other economic deposits, structural 
materials, expenses of Fuel and Ore Dressing Plant, 
collection of mining and metallurgical statistics .... 

Publications, English and French editions of reports, pur- 
chase of books of reference, laboratory supplies, in- 
struments, office contingencies 

For expenses in connection with the manufacture and 
storage of explosives 

Dominion of Canada. Assay Ofice 

Maintenance of Assay Office, Vancouver, B. C 

Geological Survey Branch 

For explorations, surveys and investigations, wages of ex- 
plorers, draughtsmen and others 

For publication of English and French editions of reports; 
maps, illustrations, etc 

For maintenance of offices and museum; instruments, 
chemicals, books of reference; miscellaneous assistance 
and contingencies 

For purchase of specimens 

Compensation to J. R. Lyons for quarters vacated 



LABOUR 

Conciliation and Labour Act, including publication, print- 
ing, binding and distribution of the Labour Gazette, and 
allowance to correspondents, and for clerical assistance 
in preparing tables of statistics 

Industrial Disputes Investigation Act 

Combines Investigation Act 

Industrial Training and Technical Education 

Fair Wages and Inspection Officers 



INDIANS 

Ontario and Quebec 

Relief, medical attendance and medicines. . 
Repairs to roads and bridges, and drainage 
General expenses 



125,000 00 

60,000 00 

900 00 

5,000 00 
190,000 00 

10,000 00 

400,000 00 
25,000 00 
26,000 00 



71.620 00 

62,000 00 
1,000 00 

25,000 00 

150,000 00 
65,000 00 



50.000 00 

5.000 00 

400 00 



35,000 00 

25,000 00 

2,500 00 

1,000 00 

15,000 00 



28.000 00 
11,900 00 
51,075 00 



430,020 00 



78,500 00 



SCHEDULE A — Continued. 



No. 

of 

Vote 



SERVICE 



Amount 



271 



272' 



273 



275 



276 



277 



278 



INDIA-NS— Concluded 
Nova Scotia 



Salaries , 

Relief 

To provide for encouragement of agriculture. 

Medical attendance and medicines 

Repairs to roads and dyking 

Miscellaneous and unforeseen 



New Brunswick 



Salaries 

Relief 

Medical attendance and medicines 

Miscellaneous and unforeseen 

Repairs to roads 

To provide for encouragement of agriculture . 

Prince Edward Island 



Salaries 

Relief and seed grain 

Medical attendance and medicines. 
Miscellaneous 



Manitoba, Saskatchewan, Alberta and Northwest 
Territories 

Implements, tools, etc 

Field and garden seeds 

Live stock 

Supplies for destitute 

Hospital, medical attendance and medicines 

Triennial clothing 

Surveys 

Sioux 

Grist and saw mills 

General expenses 

British Columbia 

Salaries 

Relief to destitute Indians 

To assist Indians in farming, fruit culture and cleansing 

orchards , 

Hospital, medical attendance and medicines 

Travelling expenses 

Office, miscellaneous and unforeseen expenses 

Surveys 

Yukon 

Relief, medical attendance and medicines 

Surveys 

General expenses 

Indian Education 

Indian Education 

General 

Advances to Indians surrendering their lands under pro 
visions of section 89 of the Indian Act, which will 
afterwards be repaid from the avails of the land .... 

Relief to destitute Indians in remote districts 

To prevent spread of tuberculosis 

Printing, stationery, etc 

Grant to assist Indian Trust Fund Account 310, suppres 
sion of liquor traffic 

Surveys, Ontario, Quebec and Maritime Provinces 

To provide for the expenses in connection with epidemic of 
small-pox and other diseases 

To provide an amount to pay Indian Agents' fees in con- 
nection with registration of births, deaths and mar- 
riages 

General legal expenses 



4, 
8, 
1, 
5. 

9, 


400 00 
000 00 
000 00 
000 00 
600 00 
162 00 


1 
8 

1 


984 00 
000 00 
000 00 
850 00 
450 00 
000 00 


1 


600 00 
125 00 
850 00 
650 00 


11 

4 

4 

143 

105 

6 

11 

6 

263 


,893 00 
,530 00 
,835 00 
,465 00 
,035 00 
,000 00 
,000 00 
,418 00 
,049 00 
,924 00 


47 
22 


,840 00 
,000 00 


8,450 00 
43,200 00 
20,000 00 
19,560 00 

5,000 00 


11 

7 
4 


,000 00 
.000 00 
,000 00 


734 


,115 00 



25,000 00 

60.000 00 

10,000 00 

5,000 00 

3,000 00 
3,000 00 

10.000 00 



1.500 00 
5,500 00 



SCHEDULE A— Continued, 



No. 
of 

Vote 



SERVICE 



Amount 



Total 



ROYAL NORTHWEST MOUNTED POLICE 

Northwest Territories, Yukon Territory, Provinces 
OF Alberta and Saskatchewan 

Pay of force 

Subsistence, billeting, forage and dog feed, fuel and light, 
clothing, repairs and renewals, horses, arms and am- 
munition, stationery, medical stores, transport, water 
service, building repairs, and contingencies 

To compensate members of the Royal North West Mounted 
Police for injuries received while in the discharge of 
duty 



GOVERNMENT OF THE NORTHWEST 
TERRITORIES 

Salary of Mr. Fred White as Commissioner of the North- 
west Territories 

Salary of Mr. L. Duplessis as Secretary to the Commis- 
sioner 

Salary of Mr. Geo. D. Pope as Accountant to the Commis 
sioner 

Schools 

Relief to destitute, maintenance of insane patients and 
prisoners 

Investigations, travelling expenses, clerical assistance, 
printing, stationery and contingencies 



GOVERNMENT OF THE YUKON TERRITORY 

Salaries and expenses connected with the administration of 
the Territory 

Grant to Local Council 

Grant to Local Council for maintenance of and repairs to 
roads 



DOMINION LANDS AND PARKS 



Salaries of the Outside Service 

Contingencies, advertising, etc 

Surveys, examination of survey returns, printing of plans 
etc 

Amount required to pay the fee of the Board of Examiners 
for D. L. Surveyors, of the Secretary and of the Sub 
examiners and for stationery, printing, rent of rooms 
and furniture, etc. (The fees of Messrs. E. Deville, 
Otto J. Klotz and W. M. Tobey, members of the 
Board, and J. A. Cote, Secretary, are to be paid out of 
this sum) 

To assist in publishing the transactions of the Association of 
Dominion Land Surveyors 

Protection of Timber in Manitoba, Saskatchewan, Alberta 
the N. W. T. and the Railway Belt in B. C, tree cul- 
ture in Manitoba, Saskatchewan, Alberta, and in- 
spection and management of Forest reserves 

Grant to Canadian Forestry Association , 

To pay expenses connected with Water-Power investiga- 
tions and reports in Manitoba, Saskatchewan, Alberta 
and the Railway Belt in B. C 

For surveys and works under the Irrigation Act, etc., in 
eluding $400 for P. Marchand as ^Auditor of disburse 
ments made by Companies acquiring lands under the 
Irrigation system 

Grant to Western Canada Irrigation Association 

Grant to Cypress Hills Water Users' Association 

Canadian National Parks 

Engraving, lithographing, printing and preparation of 
maps, plans and kindred publications of the Dominion 
including necessary materials for same 

Costs of litigation and legal expenses 

Ordnance Lands salaries and expenses 

Grant to Alpine Club of Canada 



$ cts, 

651,790 25 

503,378 75 
3,000 00 



1.000 00 

300 00 

300 00 
3,000 00 

1,900 00 

1.500 00 



120,000 00 
125,000 00 



75,000 00 



465,000 00 
270,000 00 



776,300 00 



2,400 00 
125 00 



650,000 00 
2.000 00 



159,000 00 



174,000 00 
500 00 
250 00 

300,000 00 



66,100 00 

11,000 00 

1,720 00 

1,000 00 



$ cts. 



1,158,169 00 



8,000 00 



320,000 00 



2,879.395 00 



SCHEDULE A— Continued. 



No. 

of 

Vote 



SERVICE 



Amount 



Total 



283 
284 
285 
286 
287 
288 

289 
290 
291 



292 
293 

294 

295 

296 

297 



298 
299 

300 

301 

302 

303 

304 
305 

306 
307 

308 
309 



310 



311 
312 



313 

314 



315 

316 

317 
318 
319 

320 
321 



MISCELLANEOUS 

Canada Gazelle 

Printing Bureau — Plant, repairs and renewals 

Printing Bureau — Plant — New 

Distribution of Parliamentary Documents 

Miscellaneous printing 

Contribution towards publication of International Cata 
logue of Scientific Literature 

Expenses under the Canada Temperance Act 

Expenses under the Naturalization Acts 

Unforeseen expenses, expenditure thereof to be under Order 
in Council, and a detailed statement to be laid before 
Parliament within first fifteen days of next session .... 

Grant to the Interparliamentary Union for Peace 

To provide for the expenses of the Acting High Comniis- 
sioner, London, England 

For supply of Canadian publications to Library of High 
Commissioner's Office 

To provide for purchase of 600 copies of the Parliamen ary 
Guide 

Special allowance to Sir Charles Fitzpatrick, to cover ex- 
penses when attending the sittings of the Judicial 
Committee of the Privy Council 

Special allowance to the Chief Justice of the Supreme 
Court of Canada, to cover travelling and other expenses 
in connection with his services while acting as Deputy 
to His Excellency the Governor General. 

Public Archives 

To'provide for the expenses of the Conservation Commis- 
sion 

Expenses of litigated matters conducted within the De- 
partment of Justice 

Annual contribution to the Canadian Law Library, 
London, England 

Consolidation and publication of Reports, Orders in 

Council and correspondence upon Provincial Legislation 

since 1905 

Expenses under the Pecuniary Claims Convention with the 
United States 

Grant to Chief Constables' Association of Canada 

Cost of proceedings before the International Joint Com- 
mission. 

To assist in suppression of the White Slave Traffic 

Amount required to pay Consular offices abroad for ser- 
vices 

Salaries and expenses of the Paris Agency 

Allowance to Mr. W. J. Stewart,- Chief Hydrographer, for 
services performed under Order in Council of the 19th 
October, 1912, in relation to questions under considera- 
tion by the International Joint Commission, during 
the year 1917-18 

Amount required to meet expenses of the Technical Board 
appointed to consider questions relating to the level of 
the Lake of the Woods 

Grant to Canadian Mining Institute 

Grant to assist the Canadian Association for the prevention 
of Tuberculosis 

Grant to the Canadian Handicrafts* Guild 

Grant to assist the Canadian Branch of the St. John 
Ambulance Association 

Grant to the National Battlefields Commission: — 

(a) For expenses of administration 

(6) For maintenance of the National Battlefields Park . . 
(c) For maintenance of Martello Tower No. 4 

Grant in aid of the Canadian General Council of the Boy 
Scouts Association 

Grant to the Royal Society of Canada 

Grant to the Victorian Order of Nurses 

Contribution to aid in carrying on the work of the Astrono- 
mical Society 

Royal Academy of Arts 

Canadian Press, Limited — Towards expenses of a Na- 
tional News Service 



21 
7 
50 
45 
100 


.000 00 
,000 00 
,000 00 
,000 00 
.000 00 


5 
11 


585 00 
,000 00 
.000 00 


40 


.000 00 
200 00 


12 


,000 00 


1 


,000 00 


1 


.200 00 


2 


,500 00 


2,500 00 
60,000 00 


80,000 00 


13 


,000 00 




500 00 




500 00 


5 


,000 00 
500 00 


5 
2 


,000 00 
,500 00 


28 


500 00 
,000 00 


1 


000 00 


8 
3 


000 00 
000 00 


10,000 00 
2,000 00 


5 


000 00 


5 
46 


500 00 
200 00 
400 00 


5 
4 

5 


000 00 
000 00 
000 00 


1 
2 


000 00 
500 00 


50 


000 00 



SCHEDULE A — Continued. 



SERVICE 



Amount 



Total 



M ISC ELL A N EOUS— CoMdMd#<f 

To provide for the salary of a private secretary, S. Leli^vre, 
to the Speaker of the Senate 

To provide for the salary of a private secretary, A. Hinds, 
$600, and clerical services, to the Hon. Sir James 
Lougheed, a member of the Cabinet and Leader of the 
Senate 

Contribution to McGill University towards the mainte- 
nance of a Regional Bureau for Canada, for the Inter 
national Catalogue of Scientific Literature 

Allowance for private secretary to Sir George Perley 



CUSTOMS 

Salaries and contingent expenses of the several ports in the 
Dominion, including pay for overtime of officers, not- 
withstanding anything in the Civil Service Act, and 
temporary Customs buildings and rentals 

Salaries and travelling expenses of Inspectors of ports and 
of other officers on inspection and preventive service, 
including salaries and expenses in connection with the 
Board of Customs 

Miscellaneous — Printing and stationery, subscriptions to 
commercial papers, flags, dating stamps, locks, in- 
struments, etc., for various ports of entry, express 
charges on samples, stationery and forms, legal ex- 
penses, premiums on guarantee bonds, and uniforms 
for Customs Officers 

To provide for expenses of maintenance of revenue cruisers 
and for preventive service 

Amounts to be paid to Department of Justice to be dis- 
bursed by and accounted for to it, for secret preventive 
service 



EXCISE 

Salaries of officers and inspectors of Excise, and to provide 
for increase depending on the result of Excise examina- 
tions 

For extra duty-pay at large distilleries and other factories 

Duty-pay to officers serving longer hours, at other than 
special survey 

Preventive service — Contingencies , 

Preventive service — Salaries 

Travelling expenses, rent, fuel, stationery, etc 

To provide for stamps, stationery^ salaries, travelling ex 
penses, etc., in connection with War Tax 

Stamps for imported and Canadian tobacco 

To pay collectors of customs for duty collected by them . . , 

Provisional allowance of not more than $50 each to officers 
in Manitoba and provinces west thereof, whose 
salaries from any Government service do not exceed 
$2,500 

To enable the Department to supply methylated spirits to 
manufacturers, the cost of which will be recouped by 
the manufacturers to whom it is supplied, and to pay 
rent, power, freight, salaries, etc 



WEIGHTS AND MEASURES, GAS AND ELECTRIC 
LIGHT INSPECTION 

Salaries of officers, inspectors and assistant inspector s of 
Weights and Measures 

Rent, fuel, travelling expenses, postage, stationery, etc., for 
Weights and Measures, including amount for purchase 
of Standards of the Metric System, salaries and other 
expenses of inspection 

Provisional allowance, not more than $150 each to officers 
in Manitoba and provinces west thereof, v/hose salaries 
do not exceed $2,500 per annum (Weights and 
Measures) 



$ cts. 
600 00 

1,200 00 



2,000 00 
1,200 00 



3,590.000 00 



335,000 00 



180,000 00 
100,000 00 

10,000 00 



581,318 75 
16.000 00 

2,000 00 

15,000 00 

155,000 00 

90,000 00 

125,000 00 

130,000 00 

5,000 00 



11,000 00 



170,000 00 



155,250 00 



80,000 00 



5,000 00 



648,085 00 



4,215,000 00 



,300,318 75 



SCHEDULE A—Contimied. 



No. 

of 

VoU 


SERVICE 


Amount 


Total 




WEIGHTS AND MEASURES, GAS AND ELECTRIC 
LIGHT INSFECTION— Concluded 

Salaries of gas and electricity inspectors . . 


$ cts. 
88,500 00 

59,000 00 

4,000 00 

1,000 00 

800 00 

400 00 


$ cts. 




Rent, fuel travelling expenses, stationery, etc., for gas and 
electricity inspection, and the purchase and repairs of 
instruments 




328 


Provisional allowance, not more than $150 each to officers 
in Manitoba and provinces west thereof, whose 
salaries do not exceed $2,500, (Gas and electric 
Light) 












The International Bureau of Weights and Measures 

The International Electro, Technical Commission 

ADULTERATION OF FOOD, ETC. 

Adulteration of food and the administration of the Act re- 
specting fertilizers, fraudulent marking and com- 
mercial feeding stuffs 


393,950 00 


S7Q 


50,000 00 
2,000 00 

500 00 




Proprietary or Patent Medicines 






Inland Revenue Department — Minor Revenue Expendi- 
tures 






RAILWAYS AND CANALS 

(Chargeable to Collection of Revenue) 

Canadian GovER^fMENT Railways 
Working expenses 


52,500 00 


330 


25.000.000 00 

1.440.000 00 
42,500 00 

2.000 00 

2,000 00 

2.000 00 

2.000 00 
500 00 

1.000 00 


331 


Canals 
Staff and repairs .... 




Statistical officers 




Miscellaneous 

Canadian Government Railways 

Gratuity to the wife of Fireman Wm. Blair who was badly 
injured on the Transcontinental Railway and after- 


» 




Compassionate allowance to the widow of the last Charles 
E. Moore, who was accidentally killed while in the 
discharge of his duties as engine driver on the Trans- 






Compassionate allowance to the widow of the late Gideon 
J. Fairbairn, who was accidentally killed while in the 
discharge of his duties as engine-driver on the Trans- 




332 


Compassionate allowance to the two children of the late 
Joseph Howard, who was employed as watchman on 
the Transcontinental Railway, and was killed while 
goingtohispostof duty at Ena, Ontario, Dec. 22, 1915 

Compassionate allowance to the mother of the late Fred. 
Downey, who was accidentally drowned at Halifax 
while assisting in putting out fire on Pier No. 2 

Compassionate allowance to the widow of the late John F. 
Rogers, clerk in the employ of the Canadian Govern- 
ment Railways, who was shot and killed by an insane 
soldier in the office building of the Canadian Govern- 











SCHEDULE A—Contimied. 



No. 

of 

Vote 


SERVICE 


Amount 


ToUl 




RAILWAYS AND CANALS— Concluded 


$ Ct9. 


$ cts. 




(Chargeable to Collection of Revenue) — Concluded 








M iscELLA^iEOVS— Concluded 








Hudson Bay Railroad 






m 


Compassionate allowance to the father of the late S. Harba- 
tink, who was accidentally killed while in the perform- 
ance of his duties as labourer on the Port Nelson 
Terminals of the Hudson Bay Railway 


600 00 
1,000 00 






Allowance to Thomas Maloney who was severely burned 
while in discharge of his duties as cook at Port Nelson 
— Hudson Bay Railway 






Trent Canal 






334 


Compassionate allowance to the widow of the late John 
Bakes, who was accidentally drowned on August 26, 
1916 


2,000 00 








26,495,600 00 








PUBLIC WORKS 








(Chargeable to Collection of Revenue) 








Slides and Booms, Graving Docks, Locks and 
Dams, etc.. Working Expenses, etc. 










54,400 00 

45,300 00 

53,200 00 

4,000 00 




335 


Graving docks 






Harbour and river works, etc. . . 












Telegraph and Telephone Lines 






Prince Edward Island and mainland. . 


7,000 00 

198,000 00 
55,000 00 
75,000 00 
57,000 00 
93.000 00 

255,000 00 
10,000 00 






Land and cable telegraph lines, Lower St. Lawrence and 
Maritime Provinces, including working expenses of 




336 


Saskatchewan 




1 


Alberta 






British Columbia — Mainland 












Yukon System (Ashcroft Dawson) 




[ 










906.900 00 








POST OFFICE 








Outside Service 








Salaries and allow^ances 


8,447,264 25 

8,349,737 50 

843,838 00 

195,000 00 




337 








Miscellaneous ... , 






Yukon Territory 








17,835.839 75 




TRADE AND COMMERCE ^ 




338 


Canada's proportion of expenditure in connection with 
International Customs Tariffs Bureau 


662 GO 
160.000 00 




339 


Trade Commissioners and Commercial Agents, including 
expenses in connection with negotiations of treaties or 
in extension of commercial relations; miscellaneous 
advertising and printing, or other expenditure con- 
nected with the extension of Canadian trade 





SCHEDULE A— Concluded. 



No. 

of 

Vote 


SERVICE 


Amount 


Total 


340 


TRADE AND COMMERCK—Concluded 

Bounties on lead and crude petroleum. To cover ex- 
penditure in connection with the administration of the 
Acts 


$ cts. 

5.000 00 

850,000 00 

3,000 00 

8,500 00 

810,000 00 

100,000 00 

13.500 00 

10.000 00 

4.000 00 

38,933 33 

6,000 00 

150,000 00 


$ cts. 


341 


Salaries, rents, wages and contingencies under the Canada 
Grain Act 




342 


Salaries and contingencies under the Inspection and Sale 
Act 




343 
344 
345 


Salaries and contingencies under the Cullers Act, including 
an amount of $1,800 for superannuated Cullers 

To provide for the construction, acquisition, leasing or ex- 
propriation of terminal elevators (revote) 

Census and Statistics. . . 




346 






347 


Dominion Royal Commission. . 




348 


Gold and Silver Marking Act. 




349 


West India Cable 




350 






351 


To provide for the development and extension of Canadian 
Trade 






Total 


2,159.595 33 








128.781,764 70 











SCHEDULE B. 

(Based on the Supplementary Estimates, 1916-1917.) 

Sums granted to His Majesty by this Act for the financial 
year ending 31st March, 191 7, and the purposes for 
which they are granted. 



No. 

of 

Vote 


SERVICE 


Amount 


Total 


352] 


CIVIL GOVERNMENT 

Department of Finance and Treasury Board — 

To provide for increased salary of J. C. Saunders, As- 
sistant Deputy Minister, from January 1. 1917 

Allowance for Private Secretaries — Further amount re- 
quired 


$ cts. 

300 00 
300 00 

1,500 00 
2,500 00 

1.400 00 
250 00 

300 00 
900 00 

3,000 00 
3,000 00 


$ cts. 


353 


Department of Customs — 
Contingencies — 

Clerical and other assistance— Further amount re- 






Sundries — Further amount required 




354 


Department of Inland Revenue — 

To provide for the promotion of four assistant analysts 
from Second Division Subdivision B, to Second 




355 


Department of Railways and Canals — 

To provide for increase in salary of Assistant to the 
Minister to $4,500, from January 1, 1917 




356 


Post Office Department — 

To increase the salary of Robert Fowler, Assistant 
Deputy Postmaster General, to $3,500, from 
October 1,1916 






To provide for one clerkship in First Division, Sub- 
division B. from November 1, 1916 




357 


Department of External Affairs — 
Contingencies — - 

Printing and stationery — Further amount required . . 






ADMINISTRATION OF JUSTICE 

General 

Allowance to Judges holding Courts in Rainy River Dis- 
trict in 1915-16 — Further amount required. 


13,450 00 


358 


302 00 

800 00 

1,000 00 


339 


Supreme Court of Canada 

Contingencies and disbursements, salaries of officers 
(Sheriffs, etc.), books, magazines, etc., for Judges, not 
exceeding $300 — Further amount required . . 




360 


Exchequer Court of Canada 

Contingencies — Judges' travelling expenses, remuneration 
to Sheriffs, etc., printing, stationery, etc., and $150 for 
Judges' books — Further amount required . . 








2,102 00 







SCHEDULE B — Confimted. 



No. 

of 

Vote 


SERVICE 


Amonnt 


Total 




LEGISLATION 
House of Commons 


$ cts. 


$ cts. 


f 
36l\ 


Contingencies — 

To provide an amount for the Speaker of the House of 
Commons in lieu of residence and attendants, from 
January 18, 1917, to March 31, 1917, at the rate of 


1,095 00 

1,500 00 
5,000 00 






To provide for making a General Index to the Journals 
and Sessional Papers of the House of Commons for 
the period 1904 to 1915, inclusive 












General 






362 


Printing, binding and distributing the annual Statutes — 
Further amount required 


6,000 00 






Library of Parliament 






363 


To provide for the salary of Napoleon Aubry, housekeeper, 
from January 12, 1916. to March 31, 1917, at $900 per 


1 , 100 00 
366 67 






Allowance to housekeeper in lieu of quarters, from January 
12, 1916, to March 31, 1917, at $300 per annum 


15,061 67 








ARTS AND AGRICULTURE 






364 






1,200,000 00 




MILITIA AND DEFENSE 




365 


Pay of Staff:— 

To provide for salaries of Staff of new Military District 
No. 12. 


13,265 00 
10,458 31 




366 


Gratuities:— 

To officers and civilian employees on retirement 


23,723 31 




RAILWAYS AND CANALS 






{Chargeable to Capital) 








Railways 








I flier colonial Railway 






367 


Halifax — Docks and wharves — Further amount required . . 
Halifax — New terminals facilities — Further amount re- 
quired 


18,000 00 
500,000 00 
162.220 00 






To increase accommodation and facilities along the line — 








680,220 00 




RAILWAYS AND CANALS 






{Chargeable to Income) 








Canals 






368 


Lachine Canal 
Repairs to break . . 


175 000 00 






Miscellaneous 






369 


Contribution to the International Association of the Rail- 


97 33 








175,097 33 







SCHEDULE B — Continued. 



No 

of 

Vote 



SERVICE 



Amount 



Total 



PUBLIC WORKS 

(Chargeable to Income) 

Harbours and Rivers 

Ontario 

Burlington — Revetment wall — Further amount required . 

MAIL AND STEAMSHIP SUBVENTIONS 

Steam services between Prince Edward Island and Cape 
Breton and Newfoundland — Further amount required 

SCIENTIFIC INSTITUTIONS 

Astronomical Surveys — To pay Mr. J. J. McArthur as In- 
ternational Boundary Commissioner from the 1st of 
November, 1916, to 31st of March, 1917, at $1,000 per 
annum — Revote 



INDIANS 

British Columbia 

Office, miscellaneous and unforeseen expenses- 
amount required 



-Further 



ROYAL NORTHWEST MOUNTED POLICE 

Subsistence, forage, fuel and light, clothing, buildings, 
repairs and renewals, dogs, arms, and ammunition, 
medical stores, billeting, transport, water service, 
stationery and contingencies — Further amount re- 
quired 



DOMINION LANDS AND PARKS 

To pay the fees of Mr. W. M. Tobey, member of the Board 
of Examiners for Dominion Land Surveyors — Revote 

MISCELLANEOUS 

Distribution of Parliamentary Documents — Further 
amount required 

Miscellaneous printing — Further amount required 

To provide for the purchase of 300 copies of Mr. N. O. 
Cote's "Political appointments. Parliaments, and the 
Judicial Bench in the Dominion of Canada, 1867 to 
1914"— Ordered in 1914 

Public Archives — Further amount required 

To provide for expenses in connection with the Board of 
Inquiry into the cost of living (1914-15) including pay- 
ments to John McDougall, $1,250; R. H. Coats.Sl.OOO; 
J. U. Vincent, $1,000; Legal Representatives of the 
late C. C. James, $1,000, and Thomas J. Lynton, 
secretary, $500 

To complete the Champlain Monument at Ottawa — 
Further amount required 

Contribution towards Kitchener Memorial Fund 

For the relief of sufferers by forest fires in Northern On- 
tario — Governor General's warrant 

To cover expenditure in connection with the reception of 
His Excellency the Duke of Devonshire as Governor 
General of Canada 



993 00 



3,500 00 



416 66 



8.000 00 



100.000 00 



202 SO 



5,000 00 
50,000 00 



1,500 00 
5,000 00 



4,750 00 

1,500 00 
24,333 33 

100,000 00 
5.000 00 



197,083 33 



SCHEDULE B— Continued. 



No. 

of 

Vote 



SERVICE 



Amount 



Total 



385^ 



EXCISE 

Preventive service — Contingencies — Further amount re- 
quired 

Travelling expenses, rent, fuel, stationery, etc. — Further 
amount required 

To enable the Department to supply methylated spirits to 
manufacturers, the cost of which will be recouped by 
the manufacturers to whom it is supplied, and to pay 
rent, power, freight, salaries, etc. — Further amount 
required 



386 



387 



388i 



389 



390 



WEIGHTS AND MEASURES, GAS AND ELECTRIC 
LIGHT INSPECTION 

Rent, fuel, travelling expenses, postage, stationery, etc., for 
Weights and Measures, including amount for purchase 
of standards of the Metric System, salaries and other 
expenses of inspectors — Further amount required .... 

Provisional allowance, not more than $150 each to officers 
in Manitoba and provinces west thereof, whose sala- 
ries do not exceed $2,500 per annum — (Weights and 
Measures) — Further amount required 



ADULTERATION OF FOOD, Etc. 

Adulteration of food, and the administration of the Act 
respecting fertilizers, fraudulent marking and commer- 
cial feeding stuffs — Further amount required 

To provide for payment to L. Laframboise, $58.78, and H. 
Grignon, $233.15, for special translation 



RAILWAYS AND CANALS 

{Chargeable to Collection of Revenue) 
Railways 

Intercolonial Railway — Working expenses — Further 
amount required 

Prince Edward Island Railway — Working expenses — 
Further amount required 

International Railway — Working expenses — Further 
amount required 

PUBLIC WORKS 

{Chargeable to Collection of Revenue) 

Telegraph and Telephone Lines 



Saskatchewan — Further amount required 

British Columbia — Mainland — Further aiuount required , 



POST OFFICE DEPARTMENT 

Outside Service 

To pay certain railway mail clerks for extra work in check- 
ing incoming and outgoing British mails during the 
winter of 1913-1914 at the Ports of Halifax ($71.00) 
and St. John ($33.04) ; during the winter of 1915-16 at 
St. John ($91.82); and during the summer season of 
1916 at Quebec ($459.10), notwithstanding anything 
to the contrary in the Civil Service Act 

To compensate Railway Mail Clerk Wyndham Humphrey 
of the New Brunswick District, for loss of mileage for 
the period between the 10th and 23rd October, 1916. . 

Allowance to Emile Carrier for injuries which resulted in 
the loss of an eye, sustained while acting as engineer on 
the Lady Evelyn during the season of 1916 



3,000 00 
30,000 00 

35,000 00 



68,000 00 



20.000 00 



500 00 



5,000 00 
291 93 



20,500 00 



5,291 93 



6,000,000 00 
250,000 00 
125,000 00 



6,375.000 00 



5,000 00 
4,000 00 



9,000 00 



654 96 

20 74 

6000 



1,275 00 



SCHEDULE B— Concluded. 



No. 

of 

Vote 


SERVICE 


Amount 


Total 


391 


TRADE AND COMMERCE 

Salaries, rent, wages and contingencies under the Canada 
Orain Act — Further amount reouired 


$ cts. 


$ cts. 
160 000 00 


392 


UNPROVIDED ITEMS 1915-16 

To cover unprovided items 1915-16, as per Auditor 
General's Report, Part B, page 3, 1915-16 . . 




68.859 99 




Total 








9,127,777 42 











APPENDIX 4 
BUDGET SPEECH 

DELIVERED BY 

HON. SIR THOMAS WHITE, M.P. 
Minister of Finance 

IN THE 

HOUSE OF COMMONS 
Tuesday, April 24, 1917 

Honourable Sir Thomas White (Minister of Finance) 
moved : — 

That the Speaker do now leave the Chair for the House to go 
into Committee of Ways and Means. 

He said: Mr. Speaker, I avail myself of the oppor- 
tunity afiforded by this motion to make the annual budget 
statement. 

The features of the public finances in which I conceive 
the House to be chiefly interested at the present time are 
the relationship between national income and national 
expenditure and the increase in the national debt. For 
the first year of the war the revenue from all sources was 
about $130,000,000. It rose during the second year to 
$170,000,000. For the year ended March 31 last, I am 
happy to say, our income will reach $232,000,000, or one 
hundred million in advance of the fiscal year 191 5. In 
round figures, $134,000,000 of the aggregate was de- 
rived from customs, $24,000,000 from excise, and $12,- 
500,000 from the business profits war tax. From this 
last named tax, which was introduced by the Budget of 
last year, we estimated that we should receive $25,- 
000,000 during the three years of its currency. Our ex- 
perience has proved that this estimate will be largely ex- 
ceeded. This tax was retroactive, being levied in respect 
of business accounting periods ending subsequently to 

360 



APPENDICES 

December 31, 1914. The profits of the first accounting 
period of businesses subject to the tax were much 
afifected by the severe depression and dislocation of busi- 
ness incidental to the first months of the war. Never- 
theless, from this first period the sum of $12,500,000 has 
already been collected, and when the full levy is made 
we expect to have collected in respect of this period as 
much as $15,000,000. For the second accounting 
period, the taxes for which are payable during this year, 
we estimate that the amount collected will be much 
larger — in fact, as high as $20,000,0000, or more. The 
increase will, of course, be due to the business pros- 
perity which has prevailed in Canada during the past 
year and the profits made in supplying munitions of war. 
On the whole, notwithstanding the difficulty of organiz- 
ing on short notice the official machiner}^ necessary to 
cover so large a country as Canada, the tax has worked 
out much more satisfactorily than we expected, and the 
total results will be much greater than the estimate. 

I have said that the total income of the past fiscal year 
was $232,000,000. Leaving aside for the moment our 
direct war expenditure, our outlay for the past year was 
upon ordinary account $145,000,000 and $27,000,000 
upon capital and subsidy account, or a total of $172,000,- 
000. It is to be borne in mind that of our ordinary ex- 
penditure $25,000,000 represents increased interest and 
pension charges due to the war. Taking our total 
revenue at $232,000,000 and our total current and capital 
expenditure at $172,000,000, we find that during the 
past fiscal year we were able to pay from our income all 
current and capital expenditure, all charges of interest 
upon our increased national debt, all pension outlays, 
and in addition devote the sum of $60,000,000 to pay- 
ment of the principal of our war expenditure. For a 
country such as Canada, of sparse population and with- 
out the conditions of long-established and concentrated 
wealth prevailing in older and more settled communities, 
the result must be regarded as extremely satisfactory. 

361 



THE CANADIAN BUDGETARY SYSTEM 

Coming next to the question of our direct war expen- 
diture, we find that with our increasing military effort 
it also is continually increasing. Since the beginning of 
hostilities our total war outlay, including estimated and 
unadjusted liability to Great Britain for the maintenance 
of our troops at the front and inclusive of withheld pay, 
totals, so far as we can calculate, about $600,000,000. 
As the result of this large war expenditure, the net 
national debt of Canada, which was $336,000,000 before 
the outbreak of war, has arisen to over $900,000,000, 
although this will not be shown by our official statements 
for some months to come. By the end of the present 
fiscal year it may reach $1,200,000,000. 

From the beginning it has been clear that it would not 
be possible for the people of Canada to pay, during the 
war, more than a part of the principal of our war ex- 
penditure. The policy of the Government has therefore 
been directed along two main lines : first, to fund the war 
indebtedness so as to postpoiie its maturities to periods 
well beyond the end of the war, and secondly, by in- 
creased taxation on the one hand and the reduction of 
current expenditure on works on the other to be in a 
position to meet from annual income all annual outlays 
including increased interest and pension charges and in 
addition a substantial amount of the war expenditure 
itself. 

In order to carry out this programme it will be neces- 
sary, as our war expenditure, and consequently our 
interest and pension charges increase, to increase also 
our income. This raises the question of the sources of 
revenue still open to us. A higher customs taxation 
upon luxuries has been frequently suggested, but this 
proposal overlooks the fact that most articles of this 
character are embraced under fixed rates in the treaty 
with France, and the tariff cannot therefore be raised in 
respect of these. Apart from this we should hesitate at 
a time when France needs the advantage of all her sales 
on this side of the Atlantic to assist her exchanges, to 

362 



APPENDICES 

place a prohibition or increased duty against importa- 
tions from our great Ally. 

Then it has been frequently suggested that following 
the example of Great Britain and the United States, we 
should adopt an income tax upon all incomes beyond, 
say, $i,ooo or $2,000. The comparison in this regard, 
however, of Canada with either of these countries is 
fallacious. We are not a country of large accumulated 
wealth and of incomes derived from investments. Can- 
adian incomes are derived mostly from personal earn- 
ings, and while there are many exceptions, the rule pre- 
vails generally throughout the Dominion. So far as I 
am aware the incomes of the professional and salaried 
classes throughout Canada have not materially increased 
since the outbreak of the war. In the case of many they 
have actually declined. This being so, it does not seem 
equitable to impose upon these the burden of an ad- 
ditional income tax — for they are taxed now upon their 
incomes by municipalities and pro\ances — at a time when 
owing to the war the cost of living has so greatly in- 
creased. If such a tax is to be imposed, it seems to me 
that so far as the great majority of Canadians are con- 
cerned, it might better be levied in time of peace, when 
the cost of living is again normal. It is further to be 
pointed out that the maximum amount which would be 
obtained from such a tax in Canada would in terms of 
Dominion finance be comparatively small and that its 
administration would require almost a second Civil 
Service sufficient in number to cover every municipality, 
rural and urban, throughout the Dominion. The cost 
of levy and collection of such a tax would be much higher 
proportionately than in a geographically small, wealthy, 
densely populated country like Great Britain or than in 
the United States, which although of the same area as 
Canada has twelve times the population and much more 
than twelve times our wealth. On the whole it would 
appear to me that the income tax should not be resorted 
to by the Dominion Government until its necessity be- 

363 



THE CANADIAN BUDGETARY SYSTEM 

comes clearly and unmistakably apparent notwithstand- 
ing the drawbacks which I have mentioned. In con- 
nection with this tax it is also to be observed that the 
larger incomes in so far as they are not personally earned 
are derived in part from holdings in joint stock com- 
panies already subject to taxation under the provisions 
of the Business Profits War Tax Act. It must also be 
remembered that the Canadian public are voluntarily 
supporting the Canadian Patriotic, Red Cross, and other 
funds. 1 he amount contributed annually to these funds 
is much in excess of the amount likely to be realized 
from any income tax. It is true that some wealthy men 
do not contribute their fair share to these funds. But 
this would also be true in any scheme of income taxation 
especially wdth issues of Dominion bonds exempt from 
Dominion taxation. 

The question of further revenue then narrows down 
to abnormal profits made by business firms during the 
period of the war and this in my view is the proper and 
legitimate source to which to look for increased revenue 
to meet the increased cost of the war. If a business is 
making, in war timie, profits above the normal, they must 
be due to the abnormal conditions created by the war, 
that is to say, such a business is deriving advantage from 
the war. It follows that it may properly be required to 
contribute a share of such profits to the Government for 
the purposes of the v/ar. I do not see, Mr. Speaker, that 
it makes much difference whether the business in ques- 
tion is the making of munitions or of any other class. 
Munitions are needed and no discredit attaches to the 
enterprise which provides them. The steel company 
which engages in the production of munitions could in 
most cases make as much if not more money by selling 
its steel products in world markets. Moreover, it would 
be inequitable to discriminate against the firm which 
makes a profit upon the finished article known as muni- 
tions and leave untaxed the profits (it may be equally 
large) of those firms which manufacture and supply the 

364 



APPENDICES 

raw material or partly manufactured products from 
which they are made, or the businesses throughout the 
country which make abnormal profits from the distribu- 
tion of money expended by Governments in payment for 
such munitions. If higher profits are made in the manu- 
facture of munitions the higher the tax taken under 
business profi^ts legislation. 

In accordance with the principle which I have 
enunciated the Government last year imposed the Busi- 
ness Profits War Tax. Under that legislation profits 
in excess of a certain percentage upon capital invested 
were taxed to the extent of twenty-five per cent of such 
excess. This measure has proved quite successful, not 
the least of its merits being the small cost of its admin- 
istration which will probably not exceed one-half of one 
per cent upon the amount collected. In view of the in- 
creasing interest and pension charges due to the war 
and believing this to be the true source to which recourse 
should now be had for further revenue, we propose to 
extend this tax by taking an increased share of profits. 

We propose to take from persons, firms and companies 
liable to the Business Profits War Tax Act, 191 6, fifty 
per cent of all profits in excess of fifteen per cent but not 
exceeding twenty per cent per annum and seventy-five 
per cent of all profits in excess of twenty per cent per 
annum upon capital. That is to say, up to fifteen per 
cent they will be liable to the existing legislation and in 
addition we shall take one-half of their profits between 
fifteen per cent and twenty per cent and three-fourths 
of their profits beyond twenty per cent. The increased 
tax will chiefly affect manufacturers of munitions and 
other war supplies. While the percentage of excess 
profits which is taken is large, sufficient is left to pro- 
vide incentive to effort on the part of all subject to the 
tax. 

The new legislation will apply to the last accounting 
period of the three year term provided for in the Busi- 
ness Profits War Tax Act, 19 16, namely, to all account- 

365 



THE CANADIAN BUDGETARY SYSTEM 

ing periods ending after December 31, 191 6. I am un- 
able to estimate what amount will be derived from this 
taxation as it vvill depend upon the condition of business 
during the year. It will, however, give us without 
doubt a very substantial additional revenue. 

Before leaving the question of taxation, I desire to say 
that the measures we have adopted have necessarily 
broadened in their scope as the war has progressed. No 
one has at any time been able to forecast the length of the 
war. It has now lasted nearly three years and the end 
is not yet in sight. Should another year be added to its 
duration with the consequent increase in our financial 
burden new sources of revenue must undoubtedly be 
sought. In seeking for these it should, I am sure, 
always be kept in mind that Canada has been in the past 
and will likely be for many years in the future a country 
inviting immigration and capital to develop its resources 
and contribute to its prosperity. Especially should we 
in considering taxation measures for the period follow- 
ing the war keep in view the desirability of the flow of 
settlers and capital to Canada not being retarded 
through fear on their part of heavy Federal taxation. 

Canada's war loans 

The question of our financing since the last Budget 
was fully explained and discussed in the first part of this 
session. During the recess we successfully floated the 
third Canadian War Loan, an issue of $150,000,000 five 
per cent, twenty year bonds at 96. The public response 
was most gratifying, the issue having been oversub- 
scribed to the extent of about one hundred million dollars. 
The proceeds of this loan will enable us to finance our- 
selves and the Imperial treasury in respect of expendi- 
tures in Canada until June. It is my present intention to 
arrange then for an issue of notes or treasury bills and if 
conditions are favourable offer another war loan in the 
early fall. 

366 



APPENDICES 

Since the outbreak of war we have floated in Canada 
domestic loans aggregating $350,000,000 and have in 
addition furnished $150,000,000 through our chartered 
banks to the Imperial treasury to meet its commitments 
for munitions and supplies purchased in Canada. 
Ever3'where, I believe, this is regarded as a very notable 
achievement on the part of Canada. It has not only 
made possible our participation on a large scale in the 
war, but it has in greater measure than we realized 
brought about the present state of prosperity in the 
Dominion. Without the aid ail"orded by the savings of 
our people the expenditures which have been made in 
Canada by both Governments for supplies and munitions 
could not have been made, so that those who have saved 
have benefited not only themselves but the entire com- 
munity. While our national saving during the war has 
been gratifyingly large, it is not so great as it should 
have been, and today not better advice can be offered to 
the public than to exercise the strictest thrift and econ- 
omy. Every additional da}^ the war lasts makes this in- 
dividual and national duty the m.ore imperative. 

Canada's trade 1916-17 

No aspect of our affairs during the war is more 
striking than the vast increase which has taken place in 
our international trade. The aggregate of our imports 
and exports (excluding coin and bullion) for the fiscal 
3^ear 1912 was $841,000,000; for 191 3, $1,063,000,000; 
for 1914, $1,090,000,000; for 1915, $958,000,000; for 
19 1 6, $1,309,000,000. For the year ended on March 31 
last, the total international trade of Canada reached the 
enormous total of $2,043,000,000. 

Mr. Michael Clark: Would the minister kindly give 
us a statement of the exports and imports ? 

Sir Thomas White. If my hon. friend does not mind, 
I would prefer to give them in committee. I have them 
here, but I cannot conveniently lay my hand upon them. 

367 



THE CANADIAN BUDGETARY SYSTEM 

This, Mr. Speaker, is nearly double the volume of the 
largest trade in the history of Canada before the war. 
Equally notable with this huge increase in volume is the 
change which has taken place in relative amounts of 
imports and exports. For 191 2, the balance against us 
was $125,000,000; for 1913, $309,000,000; for 1914, 
$180,000,000; for 191 5, $36,000,000. For 1916, we had 
for the first time in many years a favourable balance of 
$249,000,000. During the last fiscal year this favour- 
able balance increased to $314,000,000. Figures such 
as these indicate a very prosperous condition within the 
Dominion. It must, however, be steadily kept in mind 
that the higher prices obtainable under war conditions 
for our national products and the output of our indus- 
trial plants of war supplies and munitions are chiefly re- 
sponsible for this extraordinarily favourable condition 
of external trade, and that with the cessation of the war 
dislocation of industry and modification of prices are 
bound to ensue. I take it that it is unnecessary for me 
to mention the large increase in our exports due to our 
grain and other commodities sent abroad by us and the 
high prices which have been and are being obtained for 
them. I said that, with the cessation of the war, dis- 
location of industry and modification of prices are bound 
to ensue. The only safeguard against these conditions 
is saving on the part of all who are now engaged at good 
wages and are in a position to save and the careful hus- 
banding of their resources by firms and companies en- 
gaged in business. The position of most businesses in 
Canada is novv'^ thoroughly sound, and it is for their 
proprietors, with the prudent watchfulness of their 
bankers, to keep them in that condition. The sources 
of danger to business in war time are speculation in com- 
modities and stock exploitation on the exchanges. With 
these avoided and national savings greatly increased we 
might look forward with confidence to whatever may 
occur in the reconstruction period after the war. 

368 



APPENDICES 

We have no tariff changes to propose. 

To carry out the taxation proposal which I have an- 
nounced and certain necessary amendments to the Busi- 
ness Profits War Tax Act, 191 6, I beg to give notice of 
the following resolution which I shall move in com- 
mittee : — 

Resolved, That it is expedient to amend the Business 
Profits War Tax Act, 1916, by providing: — 

1. That in any business taxable under the Act where 
the annual profits exceed fifteen per centum per annum 
the tax shall be increased to fifty per centum with respect 
to all profits in excess of the said fifteen per centum but 
not exceeding twenty per centum per annum, and where 
the profits exceed twenty per centum per annum the tax 
shall be increased to seventy-five per centum v/ith re- 
spect to all profits in excess of the said twenty per cen- 
tum, and such increases in the tax shall be levied against 
and paid by the person owning such business for each and 
every accounting period ending after the thirty-first day 
of December, one thousand nine hundred and sixteen ; 

2. That for the purposes of the said Act, the actual 
unimpaired reserve, rest or accumulated profits held at 
the commencement of an accounting period by an in- 
corporated company shall be included as part of its 
capital as long as it is held and used by the company as 
capital ; 

That any enactment founded on this resolution shall 
be deemed to have come into force on and from the 
eighteenth day of May, one thousand nine hundred and 
sixteen ; 

3. That the tax shall be paid each year within one 
month from the date of the mailing of the notice of as- 
sessment ; 

4. That with respect to every business liable to tax- 
ation hereunder the period for which the returns shall 
be made and during which it shall be liable for assess- 
ment shall be at least thirty-six months, commencing 

369 



THE CANADIAN BUDGETARY SYSTEM 

with the beginning of the first accounting period end- 
ing after the thirty-first day of December, 1914, or for 
such less period as the business may have been carried 
on from the beginning of the said accounting period to 
the end of the period for which the said tax may be levied 
under the said Act. 



37P 



INDEX 

PAGE 

Addresses to the Crown 123 

Address from the Throne 83 

Ames, Herbert B., 

Capital and revenue accounts, 58 

Armstrong, Joseph E., 

Erection post offices without knowledge of department, 221 

Appointments on government railways, 268 

Effect of civil service reform, 269 

Atwater. Hon. Mr., 

Supplementing exhausted appropriations by Governor Gen- 
eral's warrants, 69 

Audit Act, 

Consolidated revenue and 288-328 

Auditor General, 148-9, 159-64 

Relations to Treasury Board, 151-2 

Independent status, 152-3 

Duties explained, 163-4 

Auditor General's Report, 

Required before estimates discussed, 105 

Contents of, 182-196 

Barker, Samuel, 

Public Accounts Committee procedure, 169 

Auditor General and capital expenditure, 258-9 

Bennett, William H., 

Apportionment of public works, 211 

Public wharf receipts, 214 

Public buildings entailing increased fixed charges 226 

Bergeron, Joseph H., 

Tenders for contracts, 208 

Wharfage expenditures, 214 

Blain, Richard, 

Exceeding appropriations, 224 

Blake, Hon. Edward, 

Creation of superior court judges, 280-1 

Borden, Sir Robert Laird, 

Criticism of estimates by opposition, 132-3 

Summoning witnesses before House of Commons committees 167 

Abuses caused by spoils system, 205-6 

Wharf expenditures, 216 

Wharf receipts, 217 

Plans for public buildings, 222-3 

Brock, William Rees, 

Public works expenditures in opposition districts, 21*2 

British North American Act, 

Features of, " 8-15 

Budget Speech, 119-21 

Shortcomings of, 196-8 

For 1917, 360-370 

Budgetary System, 

Essential features of, 1-7 

371 



THE CANADIAN BUDGETARY SYSTEM 



Cabinet, 

Growing power of, 276-9 

Cahan, Mr., 

Non-observance estimates, 226 

Cartwright, Sir Richard J., 

Change in fiscal year period, 48 

Charging expenditures to fiscal year, 55 

. Governor General's warrants, 63, 66, 70, 250 

Unauthorized expenditures, 72 

Budget, when to be presented, 121 

Public Accounts Committee, 164 

Ministers participating in the meetings of, 173 

To pass on action of Treasury Board overruling Auditor- 
General, 266-7 

Capital and Revenue Accounts, 57-61 

Expenditures chargeable to, 58 

Leads to manipulation of public accounts, 60 

Objections to, 255-60 

Auditor General to investigate, 259-60 

Carvell, Frank B., 

Patronage in militia appointments, 203 

Charlton, John, 

Doctoring of public accounts, 61 

Chartered Banks of Canada, 145-8 

Civil Service Reform, 

Status of, 199 

Clancy, James, 

Opposition moving to reduce estimates, 106 

Over-expenditure on public buildings, 224 

Clarke, Edward F., 

Public buildings expenditure, 223 

Cochrane, Edward, 

Public buildings estimates passed before plans made, 222 

Small initial appropriations and high ultimate costs, 223 

Consolidated Revenue and Audit Act, 150-60 

Coordination, 

Lack of between departments, 245-8 

Crockett, Oswald G., 

Erection public buildings without consulting local departments, 221 

Davidson, A. L., 

Public works used to influence election, 211 

Davies, Hon, L. H., 

Over-expenditure by Governor General's warrants, 68 

Public Accounts Committee and action of Treasury Board 

overruling Auditor General, 267 

Government railways employees in politics, 204 

Department of Finance, 

Functions of, 141-5 

Devlin, Em manual B., 

Partisan removals, ^ ^ 201 

DuFFERiN, Earl of, 

Canadian civil service, 206 

DuNKiN, Hon. Christopher, 

Writing off of unexpended balances, 52 

Durham, Lord, 

Mission to Canada and report to Queen, 28-9 



372 



INDEX 



Edwards, John W., 

Minister present when department estimates passed, 107 

Inadequate postal facilities, 227 

Emerson, Hon, Henry R., 

Dismissal government railway employees, 200 

Both parties blamable for spoils system, 201-2 

Growing power of cabinet, 276-7 

Estimates, 

Preparation of, 75-7 

Treasury control absent, 11 

For public works, 79-81 

Cabinet, control of, 81-2 

To parliament, 82 

Submission, main and supplementary, 83-5 

Form of, 89-96 

Governor General must recommend, 99 

Consideration by Parliament, 111-2 

Inadequate consideration of, 112-6 

Supplementary, 260-1 

Estimates Committee, 115-6 

Expenditures, 

Receipts determining, 274-5 

Family Compact, 24 

Fenety, G., 

Haphazard expenditures before responsible government, 29 
Lack of system in preparing estimates and effect on pro- 
vincial finances, 30-1 

Fielding, Hon. William S., 

Increased dominion subsidies explained, 42 

1907 readjustment of, 43-4 

Closing of fiscal year and pf accounts of, 53-4 

Governor General's warrants, 65-6 

Expenditures in excess of appropriations, Th 

Estimates at instance of members of Parliament, 79-80 

Salary to leader of opposition, 130 

Payment of claims by direct audit and by letter of credit, 155-6 

Wharf expenditures, 215 

Fiscal Year, Dominion, 46-7 

Fischer, Sydney Arthur, 

Change in fiscal year, 49 

Fixed and Controllable Exfenditures_, 73-4 

Flynn, Edmond Power, 

Necessity of an opposition, 127 

Foster, Sir George Eulas, 

Subsidies tend to extravagrance, 38 

Criticism of 1907 increase in, 43 

Shifting items between capital and revenue account, 60 

Employment of Governor General's warrants, 65 

Estimates at request of members of Parliament, 80 

Cabinet revision of estimates, 81 

Lump sum estimates, 94 

Effect absence of minister, 107 

Adequate consideration expenditures difficult, 112 

Witnesses before Public Accounts Committee, 170 



373 



THE CANADIAN BUDGETARY SYSTEM 



PAGE 

Change in Auditor General's report, 188-9 
Public funds used to further party interest, 201 
Patronage system, 202 
Evils caused by patronage system, 206-7 
Public wharf expenditure, 214-5, 217 
Demarcation of provincial and dominion public improve- 
ments, 214-30 
Haphazard public buildings expenditure, 218 
How determined, 219-20 
Erection without knowledge of department interested, 221-2 
Curtailment postal facilities, 227 
Appropriations rendered farcical, 225-6 
Lack of departmental coordination, 246 
Drawbacks of lump sum estimates, 262-3 
Impartial board to pass on public improvements, 270 
Objection to provincial subsidies, 281 

Fowler, George W., 

Original estimates exceeded, 223 

Eraser, Duncan C, 

Witnesses before Public Accounts Committee, " 169 

French Canada, 

History of, 20-35 
Status under treaty of 1763, . 20 
Changes caused by Quebec Act, 1774, 21 
Division into lower and upper Canada in 1791, 21-2 
Executive controlling revenues, 22-3 
Ask legislature for annual grant in 1817, 23 
Executive-legislative conflict over appropriations, 24-27 
Rebellion of 1837, 27 
Lord Durham's mission and report, 28-9 
Reunion of upper and lower Canada in 1841, and introduc- 
tion of responsible government, 32-3 
Legislature obtains control of appropriations in 1849, 33-4 
Finances of united Canada, 34-5 
Ascendency of French Canadians, 35 

German, William Manlay, 

Subversion of responsible government, 276 

Government Contracts, 

Partisan awarding of, 207-10 

Governor General, 

Must recommend estimates, 99 

Address to Parliament and transmission of estimates to 

House of Commons, 83 

Approving changes in taxation, 118 

Governor in Council, 136-8 

Governor General's Warrants, 

Statutory provisions regarding, 63 

Improper use of, _ 65-70 

Resultant evils of, _ 67-8 

Lessened abuse of, 70-1 

Abolition of desirable, 248-53 

Grey, Earl, 

Instructions to colonial governors on failure of supply bills, 251-2 

Guthrie, Hugh, 

Dominion spoils system, 199-200 

374 



INDEX 



PAGE 

Patronage lists, 208 

Competition for government contracts, 210 
Haggart, Hon. John Graham, 

Prerequisites to submission of estimates, n 

Opposition criticism of, 134 
Hazen, Hon. J. Douglas, 

Speech from the throne, 83 

Government supporters favorite, 201 

Local patronage committee, 202 

Civil service participating in politics, 204 

Tenders for government contracts, 209 
Henderson, David, 

Public buildings in sparsely populated districts, 228 

Controlling costs of same, 225 
HoLTON, Hon. Luther H., 

Change in dominion fiscal year, 46 
House of Commons, 

Membership and election of, 18 

Money bills in, 97 
Hughes, Sir Sam, 

Government supporters favored, 201 

Departmental expenditures without orders in council, 247 
Hull, Hon. John S., 

Capital and revenue accounts, 61 
Ingram, Andrew B., 

Proceedings public accounts committee, 170 
Jessel, Captain, 

English public accounts committee, 264-5 
Kyte, George W., 

Method of awarding government contracts, 209 

Public works in opposition districts neglected, 213 
Landerkin, George, 

Erection of public buildings for political ends, 228 
Landry, Hon. Dr., 

Capital expenditures omitted from Canadian budgets, 60 
Laurier, Rt. Hon. Sir Wilfred, 

Salary to leader of opposition, 130 

Treasury Board overrulings, 152_3 

Replacement of by court, I53 

Appointments on party lines, 200 

Bribing electorate with public works, 212 

Uncontemplated expenditures \\\ estimates, 254 
Leader of the Opposition. 

Position and salary, 128-31 
Lennox, Haughton, 

Cabinet responsible for changes in public employees, 78 

Treasury Board biased, 152 

Extent of patronage evils, 203 

Trivial public improvements, 216-7 
Lesperance, David Ovide, 

Partisan dismissals from office, ^ 200 
Letter of Credit, 

Payments by, 155-7 
Lewis, Edmond Norman, 

Disproportionate consideration estimates. 114 



375 



THE CANADIAN BUDGETARY SYSTEM 

PAGE 

Means of accelerating their consideration, 115 

Lister, James F., 

Public works and bribes to electorates, 212 

Lump Sum Appropriations, 261-4 

McCarthy, Dalton, 

Issuance of Governor General's warrants, 64 

McMuLLEN, James, 

Governor General's warrants, 67-8 

McNeil, Alexander, 

Governor General's warrants, 70 

MacDonald, Alexander M., 

Unexpendable items and estimates, 56 

Political activity of civil servants, 204 

Abolition of patronage evils, 207 

MacDonald, Sir John A., 

Size of Public Accounts Committee, 166 

MacLean, a. K., 

Importance of revising estimates, 175 

Low state of public conscience, 231-2 

Lack of ministerial coordination, 246 

Unexpended items in estimates, 254 

Unnecessary government expenditures, 272 

Revenue determining expenditures, 273-4 

Main Estimates, 83 

Marcil, Hon. Charles, 

Civil servants participating in politics, " 205 

Martin, Medric, 

Patronage committees awarding contracts, 203 

Middleboro, William S., 

Meetings of Public Accounts Committee, 172 

Mills, Hon. David, 

Petitions for public work, 79 

Functions of opposition, 128 

Resolution concerning public buildings, 228 

Monk, Frederick D., 

Public building policy, 219-20 

Mulock, Hon. William, 

Wasteful government expenditures, 213 

Construction of public warves, 215 

Murray, Sir George, 

Suggestions for framing estimates. 242-5 

Governor General's warrants, 252-3 

Northrup, William B., 

Procedure in Public Accounts Committee, 169-72 

Opposition, motions to reduce estimates, 106 

Criticising estimates, 132-4 

Necessity and role of, 126-34 

Salary to leader of, 128-32 

Ineffectiveness of, 271 

Osler, Edmund B., 

Wharves on inner waters, 215 

Pardee, 

Favoritism toward government districts, 211 

Parliament, 

As fund raising authority, 135 



376 



INDEX 



PAGE 

Patronage Lists, 201 

In provinces, 229 

Peters, Hon. Frederick, 

Features of budget speech, 120 

Private bill legislation, 124-6 

Private Accounts, 

Description of, 176-82 

Public Accounts Committee, 164-75 

Composition of, 164-5 

Powers, 165-7 

Summoning witnesses before, 167 

Proceedings and meetings of, 168-73 

Its value, 173-5 

Faults of, 264-5 

Proposed investigation of Treasury Board overruling, 266-7 

Public buildings, expenditures upon, 218 

Erection how secured, 219-20 

Department affected not consulted, 220-2 

Incomplete plans for, 222 

Resultant higher cost, 223 

Increased fixed charges from, 226 

Policy regarding, 227-9 

PuBUC Funds, 

Issuance from treasury, 150-5 

Disbursement of, 155-8 

As trust fund, 270 

Public Works Expenditures, 

Government districts favored with. 210-11 

Unproductive expenditures, 213 

On public wharves, etc., 213-4 

On petty improvements, 214-7 

PuGSLEY, Hon. William, 

New public works in supplementary estimates, 84 

Applications for public buildings, 220 

British naval expenditure, 278 

Quebec Act of 1774, 21 

Reid, J. p.. 

Meetings Public Accounts Committee, 172-3 

Dismissals for offensive partisanship, 204 

Responsible Government, 

Adoption of in Canada, 32-3 

Partial success only, 233-5 

Revenue Account, 

See capital and revenue account. 

Revenue Laws, 118 

Passage of, 121-3 

Revotes, 

Lapsing of unexpended balances and revotes of same, 55-7 

Roche, William J., 

Public votes and opposition districts, 211 

Rogers, Hon. Robert, 

Retention of unexpendable items in estimate, 255 

Senate, 

Appointment of, 18 
Attitude toward supply bill, 97-102, 123 



177 



THE CANADIAN BUDGETARY SYSTEM 



PAG3M 



Sheyn, Hon. Joseph, 




Capital account as set-off to public debt, 


59 


Sinclair, John H., 




Revotes of same appropriation, 


56. 


New appropriations and supplementary estimates, 


85 


Party patronage list, 


201 


New administration cancelling government contracts, 


209 


SOMMERVILLE, J AMES, 




Postoffices and politics, 


ZU 


Spoils System, 


199-207 


In provinces, 


230-i 


Prevents economy and efficiency, 


268-9 


Sproule, Thomas S., 




Revotes of unexpended appropriations, 


57 


Powers of Public Accounts Committee, 


167 


Examination of witnesses by. 


170-1 


Favoritism in awarding government contracts, 


209 


Governor General's warrants in hands of unscrupulous 


ministry, 


251 


Voting items not to be expended, 


254 


StocktoNs Alfred A., 




Salary to leader of opposition, 


129 


Subsidies, 




Origin of dominion, 


35-8 


Debt assumption clause. 


36 


Legislative and per capita subsidies, 


37-8 


To newer provinces, 


39 


1907 revision of. 


40-2 


Objections to. 


279-82 


Suppementary Estimates. 


83-5, 26D 


Supply, 




Bills of, 


110-11 


In Senate, 


123 


Supply, Committee of, 




Formation of. 


102 


Consideration of estimates in. 


104-9 


Sutherland, Hon. James, 




New public works in supplementary estimates, 


84 


Sydenham, Lord, 




On finances of upper and lower Canada, 


32 


Tanner, Hon. Mr., 




Ephemeral capital expenditure. 


59 


Tarte, Hon. J, Israel, 




Main and supplementary estimates, 


84 


Public works for government ridings, 


210 


Tax Laws, 




Governor General approving changes in, 


118 


Permanency of, 


272-3 


Tisdale, Hon. David, 




Misleading initial appropriation, 


223 


Treasury Board, 


138-41 


Overruling of Auditor General, 


151-2. 160-4 


Trust Funds, 




Public funds as, 


270 



378 



INDEX 



PAGE 

TuppER, Sir Charles Hibbert, 

Governor general's warrants, 64, 250 

Moving cause of confederation, 71 

United Canada, 

Formation of, . 28-33 

Upper Canada, 

Formation of, 21-22 

History, 22-27 

Reunited to lower Canada, 33 

Votes on Account, 116-8 

Votes of Credit, 124 

Ways and Means Committee, 

Formation of, 102 

Consideration of supply measures by, 109 

Changes in tax laws, 119 

Wharves, 

Wasteful expenditures on, 213-4 

White, Sir Thomas, 

1917 budget speech, Appendix 4, 360-370 

Wilcox, Mr., 

Ephemeral public works, 60 

Provincial patronage list, 229 



379 



f- 



f 



,J7,KARY OF CONGRESS 



oWmmi 



